[Sonesta International Hotels Corporation LOGO]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
April 17, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on May 20, 1997 at 9:00 in the morning, notice of which is enclosed. The
Meeting will be held at the Company's Corporate Offices, 200 Clarendon Street,
Boston, Massachusetts. I hope that as many stockholders as possible will attend.
Please date and sign the enclosed Proxy and return it in the accompanying
envelope. This will not prevent you from voting in person at the Meeting if you
so desire, in which case you may revoke your Proxy at that time. By returning
your signed Proxy now, you can be sure that your vote will be counted even if
you are not able to attend the Meeting. If you have received Proxies as both a
Common Stock and Preferred Stock owner, please sign, date and return both
Proxies.
The Annual Report of the Company for 1996 is being forwarded to
stockholders together with this Notice and Proxy Statement; however, any
stockholder who wishes to receive another copy of this report or the Company's
Form 10-K may obtain one, without charge, by writing to the Secretary of the
Company at the above address.
Roger P. Sonnabend
Chairman of the Board
<PAGE>
[Sonesta International Hotels Corporation LOGO]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To the Stockholders of
Sonesta International Hotels Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sonesta
International Hotels Corporation (the "Company"), will be held at the Company's
Corporate Offices, 200 Clarendon Street, Boston, Massachusetts on May 20, 1997
at 9:00 a.m. for the following purposes.
Matter No.
1. To elect a Board of Directors.
2. To ratify the appointment of Ernst & Young LLP as independent auditors for
the year 1997.
3. To consider and transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
Holders of Preferred and Common Stock are entitled to vote on Matter No. 1
as set forth in the accompanying Proxy Statement; only the holders of Common
Stock may vote on the other matters.
Stockholders of record at the close of business on April 15, 1997 are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Peter J. Sonnabend
Secretary
Dated: April 17, 1997
<PAGE>
PROXY STATEMENT
Solicitation of Proxies
The accompanying Proxy is solicited by the Board of Directors of the
Company. All shares represented by the accompanying Proxy will be voted in
accordance with the specified choice of the stockholders. In the absence of
directions, the Proxy will be voted for the election of the nominees for
Directors named in this Proxy Statement, and for the ratification of the
appointment of Ernst & Young LLP as independent auditors for the year 1997. The
Proxy may be revoked at any time before it is exercised by notifying the Company
in writing at the address listed on the Notice of Annual Meeting of
Stockholders, Attention--Office of the Secretary; or by voting in person at the
Meeting.
All costs of solicitation of Proxies will be borne by the Company. In
addition to solicitation by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit Proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward Proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their out-of-pocket and
clerical disbursements in connection therewith. This Proxy Statement and
accompanying Proxy are first being mailed to stockholders on or about April 21,
1997.
Outstanding Voting Securities and Voting Rights
The outstanding voting securities of the Company as of April 1, 1997
consisted of 2,068,215 shares of Common Stock and 10,672 shares of Preferred
Stock. Only stockholders of record at the close of business on April 15, 1997
will be entitled to vote. Stockholders are entitled to one vote per share. In
connection with the election of Directors, holders of Preferred Stock as a class
elect two Directors and holders of Common Stock as a class elect the remaining
Directors. All stockholders have cumulative voting rights with respect to the
election of Directors, which means that within each class a stockholder's total
vote (number of shares held multiplied by the number of Directors to be elected
by that class) may be cast entirely for one nominee or distributed among two or
more nominees. The Board of Directors is soliciting discretionary authority to
cumulate votes. The vote of the holders of a majority of the Common Stock voting
at the Meeting will be sufficient to take action on matters other than the
election of Directors. Holders of Preferred Stock are not entitled to vote on
any matter other than the election of Directors.
Under SEC rules, boxes and a designated blank space are provided on the
proxy card for shareholders to mark if they wish either to abstain on one or
more of the proposals or to withhold authority to vote for one or more nominees
for Director. In accordance with New York State law, such abstentions are not
counted in determining the votes cast in connection with the selection of
auditors or the election of one or more of the nominees for Director.
5
<PAGE>
1. ELECTION OF DIRECTORS
The persons named in the accompanying Proxy, unless otherwise instructed,
intend to vote shares of Common Stock in favor of the election as Directors for
the ensuing year of the Common Stock Nominees named below and to vote shares of
Preferred Stock in favor of the election as Directors for the ensuing year of
the Preferred Stock Nominees named below, and will be entitled to vote
cumulatively in respect of any such nominees. In case any of those named should
become unavailable to serve, it is intended that votes may be cast for a
substitute. The Board of Directors of the Company has no reason to believe the
persons named will be unable or decline to serve if elected.
<TABLE>
<CAPTION>
Owned Beneficially as of
Common Stock Nominees April 1, 1997(1)
--------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ----------------------------------------------------------------------------------------- ------------- ----------------
<S> <C> <C>
George S. Abrams Age: 64; Director since May, 1995;
Attorney and Director and Trustee of several organizations ........................... None 57,285(4)
(2.8%)
Mr. Abrams has been an attorney with the law firm Winer and Abrams, Boston,
Massachusetts for more than 20 years. He formerly served as General Counsel and Staff
Director of the United States Senate Judiciary Subcommittee on Refugees. Mr. Abrams
is a Director of Viacom, Inc., where he is a Chairman of the Audit Committee, and of
National Amusements, Inc. Mr. Abrams also serves as a trustee and on the Visiting
Committees of a number of cultural, arts-related and educational institutions, including
the Museum of Fine Arts, in Boston, and the Harvard University Art Museums.
Vernon R. Alden Age: 73; Director since May, 1978;
Director and Trustee of several Organizations ....................................... None 2,819
(.1%)
Mr. Alden was Chairman of the Board and Executive Committee of The Boston
Company, Inc., a financial services company, from 1969 to 1978. He was President of
Ohio University from 1962 to 1969. Mr. Alden is a Director of Colgate-Palmolive
Company, Digital Equipment Corporation and Intermet Corporation. He is also
Independent General Partner of three ML-Lee Acquisition Funds and trustee of several
cultural and educational organizations. Mr. Alden is Chairman of the Japan Society of
Boston and the Honorary Consul General for the Royal Kingdom of Thailand, in
Boston.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Owned Beneficially as of
Common Stock Nominees April 1, 1997(1)
--------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ------------------------------------------------------------------------------------------ ------------- ----------------
<S> <C> <C>
Joseph L. Bower Age: 58; Director since May, 1984;
Donald Kirk David Professor of Business Administration, Harvard Business
School ................................................................................. None 200
(Less
than
.1%)
Mr. Bower has been a member of the faculty of the Harvard Business School
since 1963 and has served as Senior Associate Dean, Chairman of the Doctoral
Programs, and Director of Research. Mr. Bower is a Director of ANIKA Research,
Inc., Brown Group, Inc., The ML-Lee Acquisition Funds, New America High Income
Fund, and is a trustee of the New England Conservatory of Music and DeCordova
and Dana Museum and Park. He has published extensively on strategy,
organization, and the relation of business and government.
Lawrence M. Levinson Age: 78; Director since January, 1973;
Partner, Burns & Levinson, Attorneys at Law (Boston, Massachusetts) .................. None 1,500
(Less
than
Mr. Levinson graduated from Harvard College in 1939 and, after serving in the .1%)
United States Army, from Harvard Law School in 1947. He serves as a Director of
Arrow Automotive Industries, Inc. and Independent Bank Corp., and an Honorary
Director of Rockland Trust Company. He also serves as a director, trustee,
officer and/or counsel for various other corporation and charitable
organizations.
Peter J. Sonnabend (8)(9) Age: 43; Director since May, 1995;
Vice Chairman and Secretary, Sonesta International Hotels Corporation .................. 2,000(5) 104,112(7)
(18.7%) (5%)
After graduating from Wesleyan University and Boston University School of Law,
Mr. Sonnabend practiced law with the Boston law firm of Winer and Abrams from 1980
to 1987. In March 1987, he joined the Company as Vice President and Assistant
Secretary, in May 1987 he became Vice President and Secretary, and in May 1995 was
named Vice Chairman. He also represents the Company as General Counsel. Mr.
Sonnabend serves as a Director of Hub Data, Inc. and is also involved in professional,
cultural and community organizations.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Owned Beneficially as of
Common Stock Nominees April 1, 1997(1)
---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ------------------------------------------------------------------------------------------ ------------- -----------------
<S> <C> <C>
Roger P. Sonnabend (6)(8) Age: 71; Director since May, 1959;
Chairman of the Board and Chief Executive Officer, Sonesta International Hotels
Corporation ........................................................................... 2,000(5) 554,084(7)
(18.7%) (26.8%)
Mr. Sonnabend, a graduate of the Massachusetts Institute of Technology and
Harvard Business School, became a Vice President of the Company in 1956 after
ten years of hotel managerial experience. Subsequently, he was Executive Vice
President and from 1963 to 1970 was President of the Company. Since June, 1970,
Mr. Sonnabend has been Chairman of the Board and from January, 1978 until
November, 1983 he also held the office of President. He is involved with many
professional, business, community and educational institutions. ...........................
Stephanie Sonnabend (8)(10) Age: 44; Director since January, 1996;
President, Sonesta International Hotels Corporation .................................... 2,000(5) 100,008(7)
(18.7%) (4.8%)
Ms. Sonnabend graduated from Harvard-Radcliffe College in 1975 and The Sloan
School of Management, MIT in 1979. She joined the company in 1979 and held
various managerial positions including Vice President of Sales, Vice President
of Marketing, and Executive Vice President. In January 1996, she became
President of the Company. Ms. Sonnabend serves on the Board of Trustees of
Radcliffe College and the Board of Overseers of New England Conservatory.
Jean C. Tempel Age: 54; Director since September, 1995;
Special Limited Partner, TL Ventures ................................................ None None
During 1991, Ms. Tempel was a consultant for Safeguard Scientifics, Inc., a
Philadelphia-based NYSE technology company. She became President and COO in
January, 1992. In November, 1993, she returned to Boston and became a partner in
TL Ventures, the Safeguard affiliated venture capital firm. She also serves as a
Director of Cambridge Technology Partners, Inc., Centocor, Inc., and the Scudder
mutual funds and is a Director of several private companies and not for profit
organizations.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Owned Beneficially as of
Common Stock Nominees April 1, 1997(1)
---------------------------------
Shares and Shares and
Percent of Percent of
Preferred Common
Name, Age and Principal Occupation Stock(2) Stock(3)
- ----------------------------------------------------------------------------- ------------- -----------------
<S> <C> <C>
Paul Sonnabend (6)(8) Age: 69; Director since June, 1961;
Chairman of the Executive Committee and Chief Financial Officer, Sonesta
International Hotels Corporation .......................................... 2,000(5) 502,014(7)
(18.7%) (24.3%)
Mr. Sonnabend graduated in 1950 from Cornell University School of Hotel
Administration after serving in the U.S. Naval Reserve. He was President of the
Company from 1970 to 1977. In May, 1980, Mr. Sonnabend became Vice Chairman of
the Board, a position he held until November, 1983 when he reassumed the
Presidency of the Company. In January, 1996, in connection with Stephanie
Sonnabend's being named President, Mr. Sonnabend was named Chairman of the
Executive Committee and Chief Financial Officer of the Company. Mr. Sonnabend is
active in many community projects.
Stephen Sonnabend (6)(8) Age: 65; Director since April, 1964;
Senior Vice President, Sonesta International Hotels Corporation ......... 2,000(5) 210,310(7)
(18.7%) (10.2%)
Mr. Sonnabend has served as General Manager of the Royal Sonesta Hotel in
Cambridge and the Sonesta Beach Resort in Key Biscayne. In 1970 he became Senior
Vice President of the Company and serves as President of the Sonesta Beach
Resort in Key Biscayne, Florida.
</TABLE>
- --------
(1) Shares are considered beneficially owned for the purposes of this Proxy
Statement if held by the person indicated as beneficial owner, or if such
person, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has the power to vote, to direct
the voting of and/or to dispose of or to direct the disposition of, such
security, or if the person has the right to acquire beneficial ownership
within sixty (60) days.
(2) As of April 1, 1997 the nominees listed in the table above owned an
aggregate of 2,000 shares of the Company's Preferred Stock, representing
18.7% of that class of equity securities.
(3) As of April 1, 1997 the nominees listed in the table above beneficially
owned an aggregate of 1,310,624 shares of the Company's Common Stock,
representing 63% of that class of equity securities.
9
<PAGE>
(4) Of these shares, 56,000 are held as a Trustee of several trusts for the
benefit of Paul Sonnabend's children and grandchildren; 42,000 of these
shares are deemed to be beneficially owned by Paul Sonnabend and 24,500 of
these shares are deemed to be beneficially owned by Peter J. Sonnabend.
(5) Constitutes the 2,000 shares of Preferred Stock owned by the Sonnabend
Foundation, a charitable trust established by the Sonnabends. See Note 2 on
page 13.
(6) Roger, Paul and Stephen Sonnabend are brothers.
(7) By virtue of his or her stock ownership interest and position with the
Company, he or she may be deemed to control (or be in common control with
other stockholders) of the Company within the meaning of the Rules and
Regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
(8) See Note 2 on page 13.
(9) Peter J. Sonnabend is the son of Paul Sonnabend, who is deemed to be the
beneficial owner of 71,700 shares of the common stock owned by Peter J.
Sonnabend.
(10) Stephanie Sonnabend is the daughter of Roger P. Sonnabend, who is deemed to
be the beneficial owner of 96,008 shares of the Common Stock owned by
Stephanie Sonnabend.
Committees of the Board of Directors
The Company's Board of Directors has an Audit Committee consisting of
Messrs. Abrams, Alden, Bower and Levinson. Mr. Alden serves as Chairman of this
Committee, which meets periodically with the Company's management and
independent public accountants to assure that they are carrying out their
responsibilities.
The Company's Board of Directors has an Executive Committee consisting of
Messrs. Levinson, Bower, Paul Sonnabend, and Roger P. Sonnabend. Mr. Paul
Sonnabend serves as Chairman of this Committee. The Committee has the authority,
except as proscribed by law, to exercise the powers of the Directors in the
management of the business affairs and property of the Company during the
intervals between the meetings of the Board.
The Company's Board of Directors has a Nominating Committee consisting of
Messrs. Bower, Alden, Peter J. Sonnabend and Stephanie Sonnabend. Mr. Bower
serves as Chairman of this Committee. The functions of this Committee include
consideration of the composition of the Board and recommendation of individuals
for election as Directors of the Company. The Nominating Committee will consider
nominees recommended by security holders provided such nominations are made
pursuant to the Company's By-laws and applicable law.
The Company's Board of Directors has a Compensation Committee consisting of
Messrs. Alden, Bower, Levinson, and Ms. Tempel. Mr. Bower serves as Chairman of
this Committee, which meets periodically to review and consider the
appropriateness of the compensation of the Company's management.
Directors' Attendance and Fees
Directors who are not salaried employees of the Company receive annual
compensation of $12,000, plus an attendance fee of $600 per meeting.
10
<PAGE>
During 1996 there were five meetings of the Board of Directors, one meeting
of the Compensation Committee, and one meeting of the Audit Committee. The
Executive Committee did not meet during 1996. Each of the nominees attended at
least 75% of the total number of meetings of the Board of Directors and of the
committees on which such Directors served during 1996.
Executive Compensation
Set forth below is the compensation paid and/or accrued by the Company,
including its subsidiaries, for services in all capacities for the last three
completed fiscal years to or for the benefit of the CEO and each of its four
other most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------------
Name & Principal Other Annual
Position Year Salary Bonus * ompensation
- ------------------------------------- ------- ----------- ---------- ---------------
<S> <C> <C> <C> <C>
Roger P. Sonnabend 1996 $418,374 56,335 NONE
Chief Executive Officer 1995 418,374 72,136
1994 402,283 79,169
Paul Sonnabend 1996 396,158 53,362 NONE
Chairman of Executive Committee 1995 396,158 68,305
and Chief Financial Officer 1994 380,922 74,965
Stephen Sonnabend 1996 280,395 37,769 NONE
Senior Vice President 1995 280,395 48,346
1994 269,611 53,059
Hans U. Wandfluh 1996 205,000 51,250 NONE
Vice President; President & General 1995 192,400 48,100
Manager, Royal Sonesta Hotel, 1994 185,000 46,250
New Orleans
Jacqueline Sonnabend 1996 200,000 26,940 NONE
Executive Vice President 1995 156,000 26,894
1994 150,000 29,520
Peter J. Sonnabend 1996 200,000 26,940 NONE
Vice Chairman, 1995 156,000 26,894
Vice President, and 1994 150,000 29,520
Secretary
Stephanie Sonnabend 1996 200,000 26,940 NONE
President 1995 156,000 26,894
1994 150,000 29,520
<CAPTION>
Long Term Compensation
---------------------------------------------------------
Restricted Securities
Name & Principal Stock Underlying LTIP ** All Other
Position Award Options/SAR's Payouts Compensation
- ------------------------------------- ------------- ---------------- ---------- --------------
<S> <C> <C> <C> <C>
Roger P. Sonnabend NONE NONE NONE NONE
Chief Executive Officer
Paul Sonnabend NONE NONE NONE NONE
Chairman of Executive Committee
and Chief Financial Officer
Stephen Sonnabend NONE NONE NONE NONE
Senior Vice President
Hans U. Wandfluh NONE NONE NONE NONE
Vice President; President & General
Manager, Royal Sonesta Hotel,
New Orleans
Jacqueline Sonnabend NONE NONE NONE NONE
Executive Vice President
Peter J. Sonnabend NONE NONE NONE NONE
Vice Chairman,
Vice President, and
Secretary
Stephanie Sonnabend NONE NONE NONE NONE
President
</TABLE>
- --------
* These bonuses were paid under the Company's incentive compensation plan. (See
p.8)
** Long Term Incentive Plan
11
<PAGE>
Agreements with Executives
The Company entered into Restated Employment Agreements with Roger P.
Sonnabend, Paul Sonnabend, and Stephen Sonnabend, effective as of January 1,
1992, and amended and updated in November 1995 (Paul) and March 1996 (Roger,
Stephen), which replaced Restated Employment Agreements dated January 1, 1984,
at annual base salaries of at least $418,374, $396,158, and $280,395,
respectively. The current terms end December 31, 1997, but are automatically
renewed for successive one year terms unless terminated by either party. Upon
the death of any of such executives, the Company has undertaken to continue
payments to their respective "Beneficiary" (as defined in the Agreement) in an
amount equal to fifty percent (50%) of the applicable base salary as of the date
of death, for a period of four years following death. Under separate agreements,
dated December 31, 1991, and amended and updated in November 1995 (Paul) and
March 1996 (Roger, Stephen), the Company has agreed that in the event of the
permanent and total disability of Roger P. Sonnabend, Paul Sonnabend or Stephen
Sonnabend while in the employ of the Company, the Company will continue payments
to such executive in an amount equal to fifty percent (50%) of the applicable
base salary at the date of disability, for a period of four years following the
disability; and if death occurs during disability, for the balance of the
four-year period, to the executive's spouse, estate or other designated
beneficiary.
Incentive Compensation Plan
The Company has an incentive compensation plan under which pre-tax profit
thresholds are established at the beginning of each year for certain of its
hotels. Once the profit threshold is reached at a hotel, key employees of that
hotel are entitled to receive a bonus equal to 3% of their annual salary, and
10% of any profits in excess of the threshold are shared proportionally by the
same group. Additionally, key employees of each hotel may receive a bonus of up
to two percentage points based on an evaluation of that hotel's performance in
the areas of personal service and hotel physical appearance. Executive Office
key employees, including officers of the Company, are entitled to receive
incentive payments equal to that percentage of their respective salaries which
equals the average (as a percentage of salaries) of all incentive payments made
to certain hotel key employees as a group.
Pension Plan
The Company has an I.R.S. qualified defined benefit pension plan which
covers all non-union salaried employees at its Executive Offices and its hotels
in Boston (Cambridge) and New Orleans. All officers and Directors who are
full-time employees of the Company are covered under this plan. Benefits under
the plan are based on the average compensation for the highest sixty consecutive
months of service during employment, reduced proportionately for each year of
service less than twenty-seven (full service period). The plan provides for
integration with 50% of the primary Social Security benefit, reduced
proportionately for each year of service less than twenty-seven. It provides for
a normal retirement age of 65 and an early retirement age of 55 with five years
of service. Benefits become vested at normal retirement age or upon the
completion of five years of service and attaining the age of 21. Thus, the
Company is unable to ascertain the benefits which may accrue to its Directors
and/or officers since the benefits are based on variable factors.
The following table sets forth a range of estimated annual retirement
benefits under the plan upon retirement at age 65.
12
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Average
Annual Compensation for Years of Service
Highest Sixty --------------------------------------------------------
Consecutive Months 15 20 25 30* 35*
- ------------------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
$125,000 ............... 30,392 40,523 50,654 54,706 54,706
150,000 ............... 37,337 49,782 62,228 67,206 67,206
175,000 ............... 44,281 59,042 73,802 79,706 79,706
200,000 ............... 51,226 68,301 85,376 92,206 92,206
225,000 ............... 58,170 77,560 96,950 104,706 104,706
250,000 ............... 65,115 86,819 108,000 117,206 117,206
300,000 ............... 79,003 105,338 120,000 120,000 120,000
350,000 ............... 92,892 120,000 120,000 120,000 120,000
400,000 ............... 106,781 120,000 120,000 120,000 120,000
450,000 ............... 120,000 120,000 120,000 120,000 120,000
500,000 ............... 120,000 120,000 120,000 120,000 120,000
</TABLE>
- --------
*The maximum benefit under the Company's Pension Plan is based on 27 years of
service.
The above benefits are calculated on a straight-life annuity basis and
after deducting a portion of Social Security benefits, as described above.
For 1996 the maximum benefit allowable under the Employee Retirement Income
Security Act of 1974 is $120,000.
Each of Roger, Paul and Stephen Sonnabend has the maximum number of years
of credited service under the pension plan (27 years). Of the other individuals
named in the Summary Compensation Table on page 7, Hans Wandfluh has 24 years of
credited service, and Jacqueline, Peter and Stephanie Sonnabend have 13, 10 and
18 years of accredited service, respectively.
Compensation Committee Report on Executive Compensation
The executive compensation program of the Company has two primary
components: base salary and annual cash incentive compensation. These components
are administered by the Compensation Committee of the Company which is comprised
of non-management directors. The Committee evaluates executive compensation in
light of numerous factors, including changes in the cost of living, job
responsibilities, job performance, the compensation awarded to executives
holding similar positions in other companies of comparable size and complexity
to the Company, characteristics unique to the Company, and the performance and
financial condition of the Company.
In determining the level of base salary for the chief executive officer and
the other executives named in the Summary Compensation Table for the year 1996,
the Compensation Committee convened in early 1996 and reviewed, in particular,
the record 1995 performance of the Company's owned hotel in Boston (Cambridge),
Massachusetts and its leased hotel in New Orleans, Louisiana, as well as the
13
<PAGE>
challenges of reopening the Company's recently acquired resort hotel in
Anguilla, B.W.I., which had been closed following Hurricane Luis in September
1995. The Committee also considered the Company's 1995 successful opening of a
new hotel in New Orleans. Based on the foregoing and the factors set forth in
the preceding paragraph, the Committee, on Management's recommendation, granted
significant base salary increases to three executive officers of the Company,
while the chief executive officer, the chairman of the executive committee and
chief financial officer, and the senior vice president of the Company received
no increase in their base salaries for 1996. Generally, the average increase in
base compensation for other executives of the Company was 4% for 1996.
The second component of compensation relates to annual bonuses which may be
earned by the chief executive officer as well as all other executive and key
officers of the Company under the Company's Incentive Compensation Plan. The
chief executive officer and the other named executive officers earn bonuses
under this plan based on the average (as a percentage of salaries) of all
incentive payments made to certain key hotel employees under such plan. The key
hotel employees earn annual bonuses under the plan based upon performance
objectives established by Management (and approved by the Compensation
Committee) at the beginning of each year for certain of the Company's hotels.
The Company's Incentive Compensation Plan is described in more detail under
"Incentive Compensation Plan" contained elsewhere in this Proxy Statement.
The Company no longer maintains a stock option plan and none of the
executive officers named in the Summary Compensation Table presently holds any
stock options. Stock options have not been deemed a necessary part of the
Company's compensation program due in part to the fact that six of the seven
named executive officers are the beneficial owners of a significant number of
shares of the Company's capital stock.
Submitted by the Compensation Committee.
Vernon R. Alden, Joseph L. Bower, Chairman, Lawrence M. Levinson, and Jean
C. Tempel.
Performance Graph
The following graph compares the annual percentage change in the cumulative
total shareholder return on the Company's Common Stock against the cumulative
total return of the NASDAQ Stock Market (US Companies) and the NASDAQ Hotels and
Motels for the five-year period commencing December 31, 1991 and ending December
31, 1996.
14
<PAGE>
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
Sonesta International Hotels Corporation
Prepared by the Center for Research in Security Prices
Produced on 04/08/97 including data to 12/31/96
[GRAPHIC REPRESENTATION OF LINE CHART]
<TABLE>
<CAPTION>
Legend
CRSP Total Returns Index for: 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sonesta International Hotels Corporation 100.0 87.1 143.2 164.4 117.6 198.3
Nasdaq Stock Market (US Companies) 100.0 116.4 133.6 130.6 184.7 227.2
NASDAQ Stocks (SIC 7010-7019 US + Foreign) 100.0 107.1 101.8 82.7 91.7 114.5
Hotels and Motels
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/91.
E. Methodology for calculating the company index was changed at request to
accommodate a one-day suspension.
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors consisted of
Vernon R. Alden, Joseph L. Bower, Lawrence M. Levinson and Jean C. Tempel
throughout 1996.
Certain Relationships/Transactions
Mr. George S. Abrams, a Director of the Company, performed legal services
for the Company during 1996 and 1997.
The law firm of Burns & Levinson, of which Mr. Lawrence M. Levinson, a
Director of the Company, is a partner, performed legal services for the Company
during 1996 and 1997.
The Company has purchased artwork for its hotels and executive offices from
Obelisk Gallery, Inc., a corporation owned by Mrs. Roger Sonnabend. Purchases
from January 1, 1996 through March 1, 1997 have totaled $134,149 including
$130,649 on behalf of managed hotels. The Company believes that the prices paid
for such artwork are at least as favorable to the Company as would have been
obtained from unrelated parties.
PRINCIPAL STOCKHOLDERS
The following tables set forth certain information as of April 1, 1997 with
respect to persons known to the Company to be the beneficial owners of more than
5% of the Company's Common Stock and more than 5% of the Company's Preferred
Stock.
COMMON STOCK
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ------------------------------- ------------------------ ----------
<S> <C> <C>
Alan M. Sonnabend (2) ...... 109,883(3) 5.3%
c/o Sonesta Beach Resort
350 Ocean Drive
Key Biscayne, FL 33149
Paul Sonnabend (2) ......... 502,014 24.3%
200 Clarendon Street
Boston, MA 02116
Peter J. Sonnabend (2) ...... 104,112(4) 5.0%
200 Clarendon Street
Boston, MA 02116
Roger P. Sonnabend (2) ...... 554,084 26.8%
200 Clarendon Street
Boston, MA 02116
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ---------------------------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Stephen Sonnabend (2) ................................................... 214,810 10.4%
200 Clarendon Street
Boston, MA 02116
All executive officers and Directors as a group (16 persons including those 1,321,324 63.9%
noted above) ............................................................
Marvin C. Schwartz (5) ................................................... 144,500 7.0%
c/o Neuberger & Berman
605 Third Avenue
New York, New York 10158-3698
</TABLE>
- --------
(1) See note 1 on Page 5.
(2) 1,216,908 shares of the Company's Common Stock are subject to the Sonnabend
Voting Trust Agreement dated August 1, 1984, as amended in December, 1984.
The voting trust terminates on December 31, 2000, or at such time as there
are fewer than two trustees. The present trustees are Messrs. Roger, Paul
and Stephen Sonnabend; any two trustees have the power to vote the shares in
their discretion unless otherwise directed by the holders of a majority of
the beneficial owners of the shares. The trustees and fourteen other members
of the Sonnabend family are the record owners of these shares.
(3) Of these shares, 109,883 are deemed to be beneficially owned by Roger P.
Sonnabend.
(4) Of these shares, 71,700 are deemed to be beneficially owned by Paul
Sonnabend.
(5) Marvin C. Schwartz has the sole power to dispose of 18,500 shares and has
shared dispositive power with regard to 115,500 shares. Mr. Schwartz has
sole voting power with regard to 18,500 shares and does not have shared
voting power over any shares.
PREFERRED STOCK
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner(1) Beneficially Owned(1) of Class
- ------------------------------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Paul Sonnabend, Stephanie Sonnabend and Peter J. Sonnabend, as holders of
the voting rights in the Sonnabend Foundation (2) ........................ 2,000 18.7%
All executive officers and Directors as a group (16 persons including above) 2,000 18.7%
</TABLE>
- --------
(1) See note 1 on Page 5.
(2) On April 1, 1997 members of the Sonnabend family, including Roger P.
Sonnabend, Paul Sonnabend, Stephanie Sonnabend, Stephen Sonnabend and Peter
J. Sonnabend, owned beneficially 2,000 shares of Preferred Stock, all of
which was owned beneficially by the Sonnabend Foundation, a charitable trust
established by the Sonnabends.
17
<PAGE>
Jacqueline Sonnabend and Hans U. Wandfluh, who are referenced in the
Summary Compensation Table on Page 7, are the beneficial owners of the following
amounts of Common Stock: Jacqueline Sonnabend: 91,408 shares; Hans U. Wandfluh:
4,000 shares. Neither of such persons is the beneficial owner of Preferred
Stock.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The persons named in the accompanying Proxy intend, unless otherwise
instructed, to vote shares of Common Stock for Ernst & Young LLP as independent
auditors for the Company for the year 1997. The appointment of this firm has
been made by the Board of Directors of the Company upon recommendation of its
Audit Committee, subject to stockholder ratification. Until 1979, Arthur Young &
Company, which merged with Ernst & Whinney during 1989 to form Ernst & Young
LLP, had acted as independent auditors for the Company for many years and was
reappointed in 1985.
Ernst & Young LLP is an internationally recognized firm of independent
auditors. This firm has considerable experience in the hotel industry and has
offices in all locations in which the Company operates. In the opinion of the
Board of Directors of the Company, Ernst & Young LLP is fully qualified to act
as independent auditors for the Company.
The Audit Committee has previously reviewed and approved the scope of the
annual audit by the Company's independent public accountants. The Committee also
reviews all services and fees at the end of each annual audit.
A representative of Ernst & Young LLP is expected to be present at the
Meeting and will have an opportunity to make a statement and is to be available
to respond to stockholders' questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intending to be presented at the next Annual
Meeting of Stockholders must comply with Rule 14a-8 of the Securities and
Exchange Commission issued under the Securities Exchange Act of 1934 and must be
received at the principal executive offices of the Company, 200 Clarendon
Street, Boston, Massachusetts 02116 not later than February 1, 1997.
18
<PAGE>
MISCELLANEOUS
The Board of Directors does not know of any matters, other than those
discussed in this Proxy Statement, which may come before the Meeting. However,
if any other matters are properly presented at the Meeting, it is the intention
of the persons named in the accompanying Proxy to vote, or otherwise act, in
accordance with their judgment on such matters.
By Order of the Board of Directors
PETER J. SONNABEND
Secretary
Dated: April 17, 1997
The Board of Directors hopes that all stockholders will attend the Meeting.
In the meantime, you are requested to execute the accompanying Proxy and return
it in the enclosed envelope. Stockholders who attend the Meeting may vote their
stock personally even though they have sent in their Proxies.
19
<PAGE>
COMMON PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY For Annual Meeting of Stockholders--May 20, 1997
Sonesta International Hotels Corporation
200 Clarendon Street, Boston, Massachusetts
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION, a New
York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and PETER J.
SONNABEND and each of them, the true and lawful attorneys and proxies of the
undersigned with power of substitution in each of them and their respective
substitute(s), for and in the name of the undersigned to vote the COMMON STOCK
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of Sonesta International Hotels Corporation, to be held on May 20, 1997 at 9:00
A.M. and at any adjournment(s) thereof, to the same extent and with all powers
which the undersigned would possess if personally present. A majority of such
attorneys and proxies or their substitute(s), or if only one be present and
acting at such meeting, then that one, shall have and may exercise all of the
powers of all of said attorneys and proxies. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement
furnished therewith, each dated April 17, 1997.
(Continued and to be SIGNED on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example
[EXAMPLE - BOX WITH X INSERTED]
The undersigned hereby instructs said proxies to vote
1. ELECTION OF DIRECTORS: G. Abrams, V. Alden, J. Bower, L. Levinson, P.J.
Sonnabend, R. Sonnabend, S. Sonnabend, J. Tempel
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
FOR all nominees
listed above (except as marked to the
contrary)
[BOX for marking vote]
WITHHOLD
AUTHORITY
to vote for all
nominees listed above
[BOX for marking vote]
2. Ratification of Ernst & Young as independent
accountants of the Company for the year 1997.
FOR AGAINST ABSTAIN
[three BOXES for marking votes]
3. On such other business as may properly come
before the meeting or any adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSALS NO. 1 AND NO. 2.
Date , 1997
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
Please sign exactly as your name or names appear
hereon. Joint owners should sign personally. Corporate
proxies should be signed by authorized officer, and
have seal affixed and attested.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
PREFERRED PROXY
SONESTA INTERNATIONAL HOTELS CORPORATION
PROXY For Annual Meeting of Stockholders--May 20, 1997
Sonesta International Hotels Corporation
200 Clarendon Street, Boston, Massachusetts
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONESTA INTERNATIONAL HOTELS CORPORATION, a New
York corporation, hereby constitutes and appoints BOY A.J. VAN RIEL and PETER J.
SONNABEND and each of them, the true and lawful attorneys and proxies of the
undersigned with power of substitution in each of them and their respective
substitute(s), for and in the name of the undersigned to vote the 5% CUMULATIVE
PREFERRED STOCK which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Sonesta International Hotels Corporation, to be held on May
20, 1997 at 9:00 A.M. and at any adjournment(s) thereof, to the same extent and
with all powers which the undersigned would possess if personally present. A
majority of such attorneys and proxies or their substitute(s), or if only one be
present and acting at such meeting, then that one, shall have and may exercise
all of the powers of all of said attorneys and proxies. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
Proxy Statement furnished therewith, each dated April 17, 1997.
(Continued and to be SIGNED on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example
[EXAMPLE - BOX WITH X INSERTED]
The undersigned hereby instructs said proxies to vote
1. ELECTION OF DIRECTORS: R. Sonnabend, S. Sonnabend
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
FOR all nominees
listed above (except as marked to the
contrary)
[BOX for marking vote]
WITHHOLD
AUTHORITY
to vote for all
nominees listed above
[BOX for marking vote]
2. On such other business as may properly come
before the meeting or any adjournment(s) thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL
BE VOTED FOR PROPOSALS NO. 1.
Date , 1997
---------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s)
Please sign exactly as your name or names appear
hereon. Joint owners should sign personally. Corporate
proxies should be signed by authorized officer, and
have seal affixed and attested.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
