<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SIGNATURE INNS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
SIGNATURE INNS, INC.
250 EAST 96TH STREET, SUITE 450
INDIANAPOLIS, INDIANA 46240
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
TO THE SHAREHOLDERS OF SIGNATURE INNS, INC.;
Notice is hereby given that the annual meeting of the Shareholders of
Signature Inns, Inc. (the "Company"), will be held at the Signature Inn West,
3850 Eagle View Drive (I-465 & West 38th Street), Indianapolis, Indiana 46254,
on Tuesday, May 19, 1998, at 2:00 p.m., Local Time for the following purposes:
1. To consider and vote upon the election of Three (3) directors for three
(3) year terms;
2. To consider and vote upon the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors for the Company for the year
ending December 31, 1998; and
3. To consider and transact such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on Thursday, April
23, 1998, as the record date for the determination of Shareholders entitled to
notice of and to vote at the annual meeting and any adjournments thereof. Only
Shareholders of record at the close of business on that date will be entitled to
vote. Holders of shares of the Company's common stock as of that date are
entitled to vote upon all matters to be presented at the meeting.
A form of proxy being solicited by management on behalf of the Board of
Directors is enclosed.
All Shareholders are cordially invited to attend the annual meeting.
Whether or not you plan to attend the meeting, the Board of Directors requests
that you sign your proxy and mail it promptly in the enclosed postage guaranteed
envelope. If you do attend the meeting, you may, of course, vote your shares
even though you have sent in your proxy; or, if, at any time prior to actual
exercise, you desire to revoke your proxy, you may do so. Approval of each of
the matters set forth above requires the affirmative vote of a majority of
outstanding shares present or represented and entitled to vote thereon.
By Order of the Board of Directors,
JOHN D. BONTREGER
Secretary
April 28, 1998
PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE GUARANTEED ENVELOPE
<PAGE> 3
SIGNATURE INNS, INC.
250 EAST 96TH STREET, SUITE 450
INDIANAPOLIS, INDIANA 46240
------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
------------------------------
INTRODUCTION
This Proxy Statement and the enclosed form of Proxy are being mailed to
shareholders (the "Shareholders") of Signature Inns, Inc. (the "Company") on or
about April 28, 1998, and are being furnished in connection with management's
solicitation of proxies to be used at the annual meeting of Shareholders to be
held on Tuesday, May 19, 1998, at the time and place and for the purposes of
considering and acting upon the matters specified in the Notice of Annual
Meeting of Shareholders accompanying and, by this reference, constituting a part
of this Proxy Statement.
Any Shareholder who executes and returns a proxy may revoke the same at any
time prior to the voting thereof by filing a written revocation with the
Secretary of the Company, by submitting another duly executed proxy with a later
date or by attending the meeting and requesting the return of his proxy from the
Secretary prior to the vote.
The entire cost of soliciting proxies will be borne by the Company. In
addition to the use of the mail, proxies may be solicited by personal interview,
telephone and facsimile transmission by directors, officers and employees of the
Company without extra compensation. The Company will also reimburse brokerage
houses, custodians, nominees and fiduciaries for actual expenses incurred in
forwarding proxy material to beneficial owners.
The Annual Report to Shareholders for the year ended December 31, 1997,
accompanies this proxy statement.
VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT HOLDERS
Only Shareholders of record at the close of business on Thursday, April 23,
1998 will be entitled to vote at the annual meeting. On that date, there were
outstanding 2,105,203 shares of common stock of the Company. Each share of
common stock is entitled to one vote with respect to each matter submitted to a
vote at the meeting. Assuming that a quorum (i.e., holders of a majority of the
total common shares outstanding) is present at the meeting in person or by
proxy, each of the matters set forth in the Notice of Annual Meeting of
Shareholders shall be decided upon by an affirmative vote of the holders of
record of a majority of the common shares present or represented by proxy at the
meeting.
On January 24, 1997, the Company completed a public offering of 2,000,000
shares of its $1.70 Cumulative Convertible Preferred Stock, Series A (the
"Series A Preferred Stock"). An additional 256,000 shares of Series A Preferred
Stock sold on January 31, and February 6, 1997, pursuant to the exercise of
over-allotment options granted to the underwriters. The Series A Preferred Stock
is convertible at the option of the holders at any time, unless previously
redeemed, into shares of common stock of the Company at an initial conversion
price of $9.60 per share of common stock (equivalent to 2.08 shares of common
stock for each share of Series A Preferred Stock converted, for an aggregate of
4,700,000 shares of common stock subject to conversion), subject to adjustment
upon certain events. The Series A Preferred Stock has no voting rights, except
that holders of the Series A Preferred Stock will have the right, together with
the holders (if any) of other series of the Company's cumulative preferred
stock, to elect two members of the Board of Directors of the Company if
dividends on any series of the Company's cumulative preferred stock remain
unpaid for six quarters.
1
<PAGE> 4
Set forth in the following table are the beneficial holdings, as of April
23, 1998 of the Company's common stock and Series A Preferred Stock of each of
the current executive officers and directors of the Company and nominees for
director, which group includes each person known to the Company who may be
deemed to own more than 5% of the Company's common stock, and all directors and
officers as a group:
BENEFICIAL HOLDINGS OF
DIRECTORS AND NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AMOUNT & NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP(1)(11) PERCENT OF CLASS
------------------------ -------------- ---------------- ----------------
<S> <C> <C> <C>
John D. Bontreger Common Stock 417,899(2) 19.65%
no par value
Mark D. Carney " 123,895(3) 5.83%
Bo. L. Hagood " 119,278(4) 5.61%
David R. Miller " 83,445(5) 3.92%
Stephen M. Huse " 753(6) *
Cumulative Convertible 100(7)
Preferred Stock, Series A
George A. Morton Common Stock 27,701(8) 1.30%
no par value
Richard L. Russell " 16,351(9) *
William S. Watson " 89(10) *
All Directors, and Executive Common Stock
Officers as a group (includes no par value 824,861 38.79%
9 persons consisting of the
above 8 persons plus Martin
D. Brew, Treasurer of the Cumulative Convertible
Company) Preferred Stock, Series A 100 *
</TABLE>
- ---------------
* Less than 1%
(1) Information with respect to beneficial ownership is based upon information
supplied by each shareholder.
(2) Mr. Bontreger owns all shares in his name of record and has sole voting and
investment power over all such shares. Includes options to acquire 8,333
shares of common stock which are currently exercisable.
(3) Mr. Carney owns all shares in his name of record and has sole voting and
investment power over all such shares. Includes options to acquire 4,167
shares of common stock which are currently exercisable.
(4) Mr. Hagood owns all shares in his name of record and has sole voting and
investment power over all such shares. Includes options to acquire 4,167
shares of common stock which are currently exercisable.
(5) Mr. Miller owns all shares in his name of record and has sole voting and
investment power over all such shares. Includes options to acquire 2,500
shares of common stock which are currently exercisable.
(6) Mr. Huse owns 545 shares of common stock in his own name of record and has
sole voting and investment power over all such shares. Includes 208 shares
which Mr. Huse has the right to acquire by conversion of his 100 shares of
Cumulative Convertible Preferred Stock, Series A.
(7) Mr. Huse owns all 100 shares of Series A Preferred Stock, in his name of
record and has sole voting and investment power over such shares.
(8) Mr. Morton holds 16,891 shares in his name of record and has sole voting and
investment power over all such shares. In addition, a total of 10,810 shares
are owned by trusts of which his wife is the trustee with investment power
over such shares.
2
<PAGE> 5
(9) Mr. Russell holds 6,891 shares in his name of record and has sole voting and
investment power over all such shares. In addition, he holds 9,460 shares
jointly with his wife with whom he shares voting and investment power over
such shares.
(10) Mr. Watson owns all shares in his name of record and has sole voting and
investment power over all such shares.
(11) In addition to the shares listed in the table above, Messrs. Shank and
Weaver, Directors Emeriti, own in the aggregate 51,812 shares of the
Company's Common Stock.
ELECTION OF DIRECTORS
Under the Company's Code of By-Laws, as amended, the Company's Board of
Directors is divided into three separate classes of directors whose terms expire
at different times, but with no term extending beyond three years. The By-Laws
require that the number of directors shall not be less than two nor more than
nine.
On March 19, 1997, the Board of Directors amended the Company's Code of
By-Laws to decrease the number of directors from nine to eight, effective as of
the 1997 Annual Shareholders' Meeting, with the ninth directorship being
eliminated from the First Class of Directors whose terms were expiring in May
1997. Also, on March 19, 1997, the Board of Directors designated Richard E.
Shank, who had served as a Director of the Company since September 23, 1978,
Director Emeritus as of the expiration of his term at the 1997 Annual
Shareholders' Meeting. On October 22, 1996, the Board of Directors accepted the
resignation as a Director of Orus E. Weaver, who had served as a Director of the
Company since its inception and designated him a Director Emeritus. The Board of
Directors elected William S. Watson to serve as a Director of the Company for
the remainder of Mr. Weaver's term. As Director Emeriti, Mr. Weaver and Mr.
Shank are invited to attend meetings of the Board of Directors and receive the
same compensation as a Director, but have no vote with respect to any matter
coming before the Board. Mr. Weaver's and Mr. Shank's invitations to attend
Board meetings and their compensation therefor terminate in May 1998. As a
result of these events, the terms of the First Class, consisting of two
Directors, will expire in May 2000, the terms of the Second Class, consisting of
three Directors, will expire in May 1998, and the terms of the Third Class,
consisting of three Directors, will expire in May 1999.
If any of the nominees elected as directors at the 1998 Annual
Shareholders' Meeting shall be unable to serve, the proxies will be voted to
fill any vacancy so arising in accordance with the discretionary authority of
the person named in the proxies. Management has no reason to believe that any
nominee will be unable to serve.
DIRECTORS STANDING FOR ELECTION
FOR A THREE YEAR TERM EXPIRING MAY 2001
The names, ages, positions and offices held, principal occupations and
tenures as director of each of the nominees, consisting of the Second Class of
directors, are set forth below:
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL OCCUPATIONS (AGES) OFFICE HELD ELECTED AS DIRECTOR TERM EXPIRES
- -------------------------------------- -------------------------- ------------------- ------------
<S> <C> <C> <C>
Bo L. Hagood Senior Vice President 11/17/93 5/19/98
Senior Vice President Hotel Hotel Operations and
Operations of Signature Inns, Director
Inc. (Age 48)
David R. Miller Vice President Sales and
Vice President Sales and Marketing Marketing and Director
of Signature Inns, Inc. (Age 56) 9/23/78 5/19/98
William S. Watson Director 10/22/96 5/19/98
Hotel Industry Consultant, WSRW
Enterprise (Age 53)
</TABLE>
3
<PAGE> 6
DIRECTORS CONTINUING IN OFFICE
The names, ages, positions and offices held, principal occupations and
tenures as director of each of the other five directors (First and Third
Classes), are set forth below:
<TABLE>
<S> <C> <C> <C>
John D. Bontreger, President, Chief 3/31/78 5/18/99
President, Chief Executive Executive Officer,
Officer, Secretary and Secretary and Chairman of
Chairman of the Board of the Board
Signature Inns, Inc. (Age 49)
George A. Morton, Director 9/23/78 5/18/99
Agri businessman (Age 61)
Richard L. Russell, Director 5/21/91 5/18/99
Director of Advertising and
Regional Director of the
National Retail Hardware
Association (Age 62)
Mark D. Carney, Senior Vice President 11/17/93 5/16/00
Senior Vice President Finance, Finance, CFO, Assistant
Chief Financial Officer and Secretary and Director
Assistant Secretary of
Signature Inns, Inc. (Age 41)
Stephen M. Huse, Director 8/18/94 5/16/00
Chief Executive Officer, Huse
Food Group, Inc. (Age 56)
</TABLE>
A. NOMINEES, DIRECTORS AND OFFICERS.
The foregoing lists of nominees and other directors constitute a complete
listing of all the directors of the Company. The officers of the Company are:
John D. Bontreger, President, Chief Executive Officer and Secretary; Mark D.
Carney, Senior Vice President Finance, Chief Financial Officer and Assistant
Secretary; Bo L. Hagood, Senior Vice President Hotel Operations; David R.
Miller, Vice President Sales and Marketing; and, Martin D. Brew, Treasurer and
Controller. Messrs. Bontreger, Carney and Hagood also are members of the board
of directors of the Company's three wholly owned subsidiaries, namely, P & N
Corporation, S.I.E. Corporation, and SI Springfield Corporation. Mr. Bontreger
is the president, Mr. Carney the secretary and Mr. Brew the treasurer of each of
the subsidiaries.
B. FAMILY RELATIONSHIPS.
No family relationship exists between any director and any other director,
executive officer or nominee for director of the Company.
C. OTHER DIRECTORSHIPS.
Except for Mr. Huse, who is a director of Marsh Supermarkets, Inc., no
director or nominee for director holds any directorship in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, or which is subject to the requirements of Section 15(d) of that
Act or which is a company registered as an investment company under the
Investment Company Act of 1940.
D. CERTAIN PROCEEDINGS.
No officer, director or nominee for director, and no affiliate or associate
of any of those persons, was a party to any kind of proceeding, whether civil,
criminal, administrative or bankruptcy related, or the subject of any order,
judgment or decree during the past five years, which would be material to an
evaluation of the ability or integrity or such person, nor has any such person
been a party to any proceeding adverse to the Company or its subsidiaries or
affiliates, or has had any material interest adverse to the Company or its
subsidiaries or affiliates.
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<PAGE> 7
E. CONTROL PERSONS.
Mr. Bontreger is a "control person" of the Company as defined under
regulations promulgated by the Securities and Exchange Commission.
F. COMMITTEES OF THE BOARD.
1. AUDIT COMMITTEE. The Audit Committee meets as deemed necessary: (a) to
recommend to the Board of Directors the retention, from time to time, of
independent auditing firms to be engaged by the Company, subject to shareholder
ratification; (b) to coordinate the annual audit of the Company between
management and the auditing firm; (c) to meet with the auditors at least two
times during the year, including one meeting before the audit is commenced and
one meeting following the completion of the audit; and, (d) to meet at such
other times as the Board of Directors, in its discretion, directs or as the
Committee, itself, determines. Committee members serve one-year terms from one
annual shareholders' meeting to the next. Current members of the Audit Committee
are Richard L. Russell, Chairman, and William S. Watson. The Audit Committee met
two times during the year ended December 31, 1997.
2. COMPENSATION COMMITTEE. The purposes and functions of the Compensation
Committee are to: (a) develop and recommend to the Board of Directors for
approval a compensation plan for the president/chief executive officer and all
other individuals within the Company who are designated as "senior management;"
(b) review benefit, bonus and incentive plans and other corporate perquisites on
an annual basis; (c) review and recommend to the Board suggested changes in
compensation to be paid to outside members of the Board; and, (d) review expense
reimbursement policies of the Company as they pertain to directors and
management. The Compensation Committee meets as determined necessary by the
Board or by the Compensation Committee. Current members of the Compensation
Committee are George A. Morton, Chairman, and Stephen M. Huse. During the year
ended December 31, 1997, the Compensation Committee met three times.
G. NUMBER OF MEETINGS.
During 1997, the Board of Directors of the Company held a total of six
regularly scheduled meetings and two telephone meetings. All directors listed
above attended at least 75% of those meetings.
H. SECTION 16(A) REPORTS.
Except for Mr. Weaver, a director emeritus of the Company, no officer,
director or beneficial owner of more than ten percent of any class of equity
securities of the Company who was required to file reports under Section 16(a)
of the Exchange Act failed to file such reports on a timely basis during 1997.
I. BUSINESS BACKGROUNDS OF OFFICERS AND DIRECTORS.
A brief description of the business background and experience of each
officer and director of the Company is as follows:
JOHN D. BONTREGER, 49 President, Chief Executive Officer, Secretary and
Chairman of the Board
Mr. Bontreger is the founder of the Company and has served as its
President, Chief Executive Officer and Chairman of the Board since the Company's
inception in March 1978. He is responsible for the overall management of the
business affairs of the Company. Prior to founding the Company, Mr. Bontreger
served from 1975 to 1978 as a vice president for an Indiana-based hotel company.
Mr. Bontreger holds a Bachelor of Science Degree from Goshen College, Goshen,
Indiana, where he graduated in 1972.
MARK D. CARNEY, 41 Senior Vice President Finance, Chief Financial
Officer, Assistant Secretary and Director
Mr. Carney joined the Company in 1992 as the Vice President of
Finance/Chief Financial Officer and is responsible for the financial operations
and finance functions of the Company. In 1997, Mr. Carney was named Senior Vice
President Finance. Prior to joining the Company, Mr. Carney was employed by KPMG
Peat Marwick, in Indianapolis, Indiana. He was responsible for services to
publicly and privately owned real estate
5
<PAGE> 8
developers and operators, hospitality companies and financial institutions. Mr.
Carney is a 1979 graduate of Indiana University, with a Bachelor of Science
Degree from the School of Business and is a member of the American Institute of
Certified Public Accountants.
BO L. HAGOOD, 48 Senior Vice President Hotel Operations and Director
Mr. Hagood has been employed by the Company since December 1980 starting as
a hotel general manager. In January 1984, he was promoted to Director of Hotel
Operations and then to Vice President Hotel Operations in 1987 and Senior Vice
President Hotel Operation in 1997. Mr. Hagood has been employed in the
hospitality industry for over 25 years, having managed several hotels for
national chains prior to joining Signature Inns, Inc. Mr. Hagood graduated from
Appalachian State University in 1971 with a Bachelor of Science Degree in
Business Administration.
DAVID R. MILLER, 56 Vice President Sales and Marketing and Director
Mr. Miller has been employed by the Company since August 1978 and has
served as the Secretary (until May, 1997) and Treasurer (until May 1986) of the
Company since September 1978. From 1990 to 1997, Mr. Miller was the Executive
Director of Sales and Marketing and, after May 18, 1997, became Vice President
Sales and Marketing responsible for assisting in the development and
implementation of the Company's advertising, marketing and public relations
programs. He has served as liaison with the Company's advertising and public
relations agencies and has directed the local, regional and national hotel room
sales programs and the central reservation system. Mr. Miller is a 1965 graduate
of Ashland University, Ashland, Ohio, with a B.S. in Business Administration.
MARTIN D. BREW, 37 Treasurer and Controller
Mr. Brew has been employed by the Company since April 1986. In December
1987, Mr. Brew assumed the position of Controller and, in April 1992, he began
serving as Treasurer. Mr. Brew is responsible for the Accounting and Information
Systems Department and the functions of financial reporting, investor reporting,
cash management, property and casualty insurance, legal compliance, automation
concepts, tax planning and audit coordination. Prior to his employment with
Signature Inns, Inc., Mr. Brew was employed by KPMG Peat Marwick. Mr. Brew is a
1982 graduate of Indiana University, with a Bachelor of Science Degree from the
School of Business and is a member of the American Institute of Certified Public
Accountants.
GEORGE A. MORTON, 61 Director
Mr. Morton has been manager, operator and part owner of Morton Farms, Inc.
since 1962, and serves as Vice President and Secretary of that company. From
April 1987 to January 1989, Mr. Morton served as deputy Commissioner of
Agriculture for the State of Indiana. He served as the Indiana Director of
Farmers Home Administration from 1989 to 1993. Mr. Morton is a 1958 graduate of
Purdue University.
RICHARD L. RUSSELL, 62 Director
Mr. Russell is the Director of Advertising of the National Retail Hardware
Association ("NRHA") and the Executive Director of the Indiana, Kentucky and
Tennessee Region of the NRHA, and he has been involved in the hardware industry
for nearly thirty years. He is also serving as president or director of several
community and civic organizations. Mr. Russell is a 1958 graduate of Purdue
University.
STEPHEN M. HUSE, 55 Director
Mr. Huse is Chairman and Chief Executive Officer of Huse Food Group, Inc.,
Bloomington, Indiana. In addition, Mr. Huse is President of St. Elmo,
Incorporated, which operates the St. Elmo Steak House in downtown Indianapolis,
and Chief Executive Officer of Beef Corporation of America, a franchisee of
Arby's roast beef restaurants in central and southern Indiana. Previously, Mr.
Huse was President and Chief Executive Officer of Consolidated Products, Inc.,
operator of Steak 'n' Shake restaurants. He is also the founder of Noble Romans,
Inc., a franchisor of pizza parlors in the Midwest. Mr. Huse is also a director
of Marsh Supermarkets, Inc., and a member of the Advisory Board of Keybank of
Central Indiana, Indianapolis, Indiana. Mr. Huse is a 1965 graduate of Indiana
University.
6
<PAGE> 9
WILLIAM S. WATSON, 53 Director
Mr. Watson currently provides hotel industry consulting services through
WSRW Enterprise, which is affiliated with Stratus Management Group, Inc. Mr.
Watson previously served as Vice-Chairman of Pegasus Systems, Inc., and Chairman
of THISCO (The Hotel Industry Switch Company). Mr. Watson previously held
positions with Best Western International as Senior Vice President Worldwide
Marketing and Executive Vice President. Mr. Watson was also employed as a Vice
President of ITT Sheraton Corporation, and he held executive positions with
Bicoastal Air Service, Inc., Altair Airlines, Inc. and Pan American World
Airways. Mr. Watson holds a Mechanical Engineering degree from Croydon
Polytechnic in England.
RICHARD E. SHANK, 64 Director Emeritus
Mr. Shank, who served as Director of the Company from September 23, 1978,
to May 18, 1997 was designated a Director Emeritus by the Board of Directors on
March 19, 1997, effective as of the 1997 Annual Shareholders' Meeting. As a
Director Emeritus, Mr. Shank is invited to attend meetings of the Board of
Directors and receives the same compensation as a Director, but has no vote with
respect to any matter coming before the Board. Mr. Shank's invitation to attend
Board meetings and his compensation therefor terminate in May, 1998.
ORUS E. WEAVER, 74 Director Emeritus
Mr. Weaver, who served as a Director of the Company from its inception
through October 22, 1996, was designated a Director Emeritus by the Board of
Directors on October 22, 1996. As a Director Emeritus, Mr. Weaver is invited to
attend meetings of the Board of Directors and receives the same compensation as
a Director, but has no vote with respect to any matter coming before the Board.
Mr. Weaver's invitation to attend Board meetings and his compensation therefor
terminate in May, 1998.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Company believes that the primary objectives of the Company's executive
compensation policies should be:
- To attract and retain talented executives by providing compensation
opportunities that are competitive with the compensation provided to executives
at companies of comparable size and position, while maintaining compensation
within levels that are consistent with the Company's business plan, financial
objectives and operating performances;
- To provide meaningful annual incentive opportunities for executives to
work toward and achieve the Company's profit and other targets established in
the Company's business plan; and
- To align the interest of executives with those of shareholders by
providing substantial long-term incentive opportunities through stock options
and other forms of stock ownership.
The Company believes that its executive compensation program should be
reviewed periodically to insure its support of the Company's financial
performance and its business plan. It also should be compared to practices of,
and levels paid by, other companies with whom the Company competes for business
and human resources. The Company's intent is not simply to copy the practices
and levels of others, but rather to continually strive to have a program that
takes into account factors unique to the Company.
The Company believes that executive compensation should be comprised of:
(1) base compensation; (2) annual (short-term) compensation; and, (3) long-term
compensation. The Company believes that base compensation is currently set at
levels competitive with executives with similar responsibilities at other
companies similar in size and complexity to the Company.
The Company believes that annual incentive compensation should be utilized
to retain management, provide motivation, and move the Company in a positive
financial direction. Substantial incentive opportunities are provided to
executives based upon the level of achievement of targeted profit goals for the
Company, and the level of individual responsibility and achievement.
7
<PAGE> 10
The Company believes that an integral part of the executive compensation
programs should be long term incentive. Through equity based compensation in the
form of Company stock, the long-term interest of executives are aligned with
those of Shareholders. Because the Company believes that significant stock
ownership by management is a catalyst in building shareholder value, it will
continue to utilize stock options and review and possibly use other shareholder
value related vehicles to provide long-term incentive compensation.
The Company believes that its compensation philosophies further the
interests of its shareholders, since a significant part of executive
compensation is based upon obtaining results that increase the value of the
Company and are beneficial to all shareholders.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
YEAR ENDED -----------------------
NAME AND PRINCIPAL POSITION DECEMBER 31 SALARY ($) BONUS ($)
--------------------------- ----------- ---------- ---------
<S> <C> <C> <C>
John D. Bontreger 1997 159,450 78,091
President & CEO 1996 153,317 80,110
1995 147,833 89,066
Mark D. Carney 1997 96,370 49,695
Senior V.P. Finance & CFO 1996 92,663 52,797
1995 89,350 56,679
Bo L. Hagood 1997 96,370 49,695
Senior V.P. Hotel Operations 1996 92,663 50,797
1995 89,350 56,679
David R. Miller 1997 81,769 26,213
Vice President Sales and Marketing 1996 78,624 28,313
1995 75,911 32,388
</TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
[INDIVIDUAL GRANTS]
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) EXPIRATION DATE
---- ------------ ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
John D. Bontreger 25,000 26.6% $8.00 1-21-07
Mark D. Carney 12,500 13.3% $8.00 1-21-07
Bo L. Hagood 12,500 13.3% $8.00 1-21-07
David R. Miller 7,500 8.0% $8.00 1-21-07
</TABLE>
EMPLOYMENT CONTRACTS
The Company has employment contracts with John D. Bontreger, Mark D.
Carney, Bo L. Hagood, and David R. Miller. The terms of the employment contracts
provide for base salaries of the officers, plus bonuses, as determined annually
by the Company's Board of Directors. In addition, the employment contracts
provide for the payment of other customary benefits, including medical, life and
disability insurance premiums. Mr. Bontreger's contract expires in June 1998.
Messrs. Hagood's and Carney's contracts expire in December, 1998. Mr. Miller's
contract expires in June, 1998. The contracts are renewable for subsequent
terms: Mr. Bontreger's for one and one-half years; Messrs. Hagood's and Carney's
for one year; and, Mr. Miller's for six months. The contracts are not terminable
by the Company except upon "just cause" as defined in the contracts.
In the event the Company terminates an officer's employment without "just
cause," or in the event an officer resigns "with just cause" (i.e., where the
Company materially breaches the agreement), the officer is entitled to
8
<PAGE> 11
receive from the Company lump sum severance payments equal to a multiple of
yearly "regular compensation," as defined in the contracts. In such events, Mr.
Bontreger would receive severance benefits equal to one and one-half times his
"regular compensation," Messrs. Hagood and Carney would receive severance
benefits equal to one time such compensation, and Mr. Miller would receive
severance benefits equal to one-half times such compensation.
In the event of the termination of an employment contract by the Company
"for just cause" or a resignation by an officer "without just cause" the
severance benefits would not be payable. In addition, in the event the Company
terminates an employment contract for "just cause" or the officer resigns
"without just cause," the officer must abide by certain restrictive, non-compete
provisions for the same period as the then current term of the contract.
COMPENSATION OF DIRECTORS
Each of the Company's non-employee directors (each, an "Outside Director")
is paid a retainer of $6,000 per year, payable quarterly. In addition, each
Outside Director receives a fee of $750 per Board meeting attended (other than
telephonic Board meetings which are covered by the retainer), and receives a fee
of $750 for each Committee meeting attended. Under the terms of the 1996 Equity
Incentive Plan, awards of 500 shares of Restricted Stock are automatically
granted to Outside Directors upon such directors' election or re-election.
Outside Directors are also reimbursed for reasonable costs and expenses,
including travel expenses, incurred by them in connection with their attendance
at any board or committee meeting.
OTHER INFORMATION
Except for the promissory notes executed and delivered to the Company by
members of management in connection with their purchase of shares in 1994, which
were paid in full in 1996, no loans have ever been made by the Company or its
subsidiaries to any officer or director of the Company.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has proposed and recommends to the Shareholders
ratification of the appointment of the firm of KPMG Peat Marwick LLP ("KPMG"),
certified public accountants, as independent auditors to conduct an audit of the
financial statements of the Company for the fiscal year ending December 31,
1998, and to provide such other accounting services as may be considered
necessary by the officers of the Company. KPMG has been the Company's auditor
since 1984. Representatives of KPMG will be present at the meeting to make a
statement if they desire to do so, and respond to appropriate questions.
VOTE REQUIRED. Ratification of appointment of KPMG requires approval by the
holders of the majority of the shares of the Company's Common Stock present or
represented and entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
NO DISSENTERS' RIGHTS
There are no rights of appraisal or similar rights of dissenters with
respect to any matter to be acted upon at the annual meeting.
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is set forth in full in the Company's 1997 Annual Report to
Shareholders which accompanies this Proxy Statement, and is incorporated herein
by reference.
PROPOSALS OF SHAREHOLDERS
Certain regulations of the Securities and Exchange Commission require that,
in the event an eligible Shareholder of the Company timely notifies the Company
of his intention to present a proper proposal for action at a forthcoming
Shareholders' meeting, the Company include the proposal in its proxy statement,
identify it in its form of proxy and provide the Shareholders an opportunity to
vote in respect to the proposal. Any proposal which a Shareholder intends to
present at the Company's 1999 Annual Shareholders' Meeting must be received by
the Company for inclusion in its proxy statement and form of proxy relating to
that meeting not less than 120 days in advance of the release of such proxy
statement and form of proxy. The Company's proxy statement and form of proxy are
typically mailed to the Shareholders on or about April 14, and accordingly,
proposals with respect to the May 18, 1999 annual meeting must be received no
later than December 15, 1998.
OTHER BUSINESS
Management knows of no business which will be presented for consideration
other than the matters described in the Notice of Annual Meeting of
Shareholders, but if other matters are presented, it is the intention of the
persons designated as proxies to vote in accordance with their judgment on such
matters.
ANNUAL REPORT
The 1997 Annual Report of the Company, including audited financial
statements, is hereby incorporated in its entirety herein by reference and is
being mailed with this Proxy Statement.
April 28, 1998
10
<PAGE> 13
PROXY PROXY
SIGNATURE INNS, INC.
250 EAST 96TH STREET, SUITE 450
INDIANAPOLIS, INDIANA 46240
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- MAY 19, 1998
The undersigned appoints John D. Bontreger with full power of substitution
and revocation, to vote, as designated above, all the Common Stock of Signature
Inns, Inc. which the undersigned has powers to vote, with all power which the
undersigned would possess if personally present, at the annual meeting of
shareholders thereof to be held on May 19, 1998, or at any adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR Proposal No. 2.
PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE GUARANTEED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE> 14
SIGNATURE INNS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. ELECTION OF DIRECTORS FOR THREE YEAR TERM -
NOMINEES: BO L. HAGOOD, DAVID R. MILLER AND WILLIAM S. WATSON
FOR ALL
FOR WITHHOLD (EXCEPT NOMINEE(S)
ALL ALL WRITTEN BELOW)
[ ] [ ] [ ]
-----------------------------------------------------------------------------
2. RATIFICATION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT PUBLIC
AUDITORS OF 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, OR
ANY ADJOURNMENTS THEREOF.
DATED: ____________________________, 1998
SIGNATURE(S)________________________________________
____________________________________________________
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
