<PAGE>
[LOGO]
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
April 20, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held on May 30, 2000, at 3:00 in the afternoon, 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 1999 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>
[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 30, 2000,
at 3:00 p.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 2000.
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 17, 2000 are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Peter J. Sonnabend
SECRETARY
Dated: April 20, 2000
<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 2000. 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 20,
2000.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The outstanding voting securities of the Company as of April 1, 2000
consisted of 3,715,230 shares of Common Stock and 10,672 shares of Preferred
Stock. Only stockholders of record at the close of business on April 17, 2000
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
APRIL 1, 2000(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ------------ -----------
<S> <C> <C> <C>
George S. Abrams Age 67; Director since May, 1995;
Attorney and Director and Trustee of several organizations.......... None 2,570
(Less
than
.1%)
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 Corporate Governance 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 Harvard University.
Vernon R. Alden Age: 76; Director since May, 1978;
Director and Trustee of several organizations....................... None 5,638
(.15%)
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 1961 to 1969. Mr. Alden is a
former Director of Digital Equipment Corporation, Colgate-Palmolive
Company, McGraw-Hill, The Mead Corporation and Intermet Corporation. He
is an Independent General Partner of three ML-Lee Acquisition Funds and
trustee of several cultural and educational organizations. Mr. Alden is
a 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
APRIL 1, 2000(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ------------ -----------
Joseph L. Bower Age: 61; Director since May, 1984;
<S> <C> <C> <C>
Donald Kirk David Professor of Business Administration, Harvard
Business School..................................................... None 400
(Less
than
.1%)
Mr. Bower has been a member of the faculty of the Harvard Business
School since l963 and has served as Senior Associate Dean for External
Relations, Chairman of the Doctoral Programs, Director of Research, and
currently chairs The General Manager Program. Mr. Bower is a Director of
ANIKA Therapeutics, Inc., Brown Shoe Co., Inc., The ML-Lee Acquisition
Funds, New America High Income Fund, and is Vice Chairman of the New
England Conservatory of Music and a trustee of the DeCordova and Dana
Museum and Sculpture Park. He has published extensively on strategy,
organization, and the relation of business and government.
Peter J. Sonnabend (7) (8) Age: 46; Director since May, 1995;
Vice Chairman and Secretary, Sonesta International Hotels
Corporation......................................................... 2,000(4) 212,224(6)(10)
(18.7%) (5.7%)
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 is a
trustee of The Institute of Contemporary Art, in Boston.
Roger P. Sonnabend (5) (7) Age: 74, Director since May, 1959;
Chairman of the Board and Chief Executive Officer, Sonesta
International Hotels Corporation.................................... 2,000(4) 1,061,202(6)
(18.7%) (28.6%)
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.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
OWNED BENEFICIALLY AS OF
APRIL 1, 2000(1)
COMMON STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ------------ -----------
Stephanie Sonnabend (7) (9) Age: 47; Director since January, 1996;
<S> <C> <C> <C>
President, Sonesta International Hotels Corporation.................... 2,000(4) 222,750(6)
(18.7%) (6.0%)
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
Directors of Century Bancorp and Century Bank and Trust, and the Board of
Overseers of New England Conservatory.
Age: 57; Director since September,
Jean C. Tempel 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, a Safeguard affiliated venture capital
firm. She serves as a trustee of the Scudder-Kemper mutual funds, and of
several private technology companies, and is a trustee of Northeastern
University and Connecticut College.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
OWNED BENEFICIALLY AS OF
APRIL 1, 2000(1)
PREFERRED STOCK NOMINEES -------------------------
SHARES AND SHARES AND
PERCENT OF PERCENT OF
PREFERRED COMMON
NAME, AGE AND PRINCIPAL OCCUPATION STOCK(2) STOCK(3)
---------------------------------- ------------ -----------
<S> <C> <C> <C>
Paul Sonnabend (5) (7) Age: 72; Director since June, 1961;
Chairman of the Executive Committee and Chief Financial Officer,
Sonesta International Hotels Corporation............................ 2,000(4) 955,228(6)
(18.7%) (25.7%)
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.
Age: 68; Director since April,
Stephen Sonnabend (5) (7) 1964;
Senior Vice President, Sonesta International Hotels Corporation..... 2,000(4) 387,220(6)
(18.7%) (10.4%)
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, 2000 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, 2000 the nominees listed in the table above beneficially
owned an aggregate of 2,504,238 shares of the Company's Common Stock,
representing 67% of that class of equity securities.
9
<PAGE>
(4) 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 17.
(5) Roger, Paul and Stephen Sonnabend are brothers.
(6) By virtue of his or her stock ownership interest and position with the
Company, he or she may be deemed to control the Company (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.
(7) See Note 2 on page 17.
(8) Peter J. Sonnabend is the son of Paul Sonnabend, who is deemed to be the
beneficial owner of 143,400 shares of the common stock owned by Peter J.
Sonnabend.
(9) Stephanie Sonnabend is the daughter of Roger P. Sonnabend, who is deemed
to be the beneficial owner of 199,594 shares of the Common Stock owned by
Stephanie Sonnabend.
(10) Of these shares, 16,000 are held as a Trustee of several trusts for the
benefit of Paul Sonnabend's children and grandchildren; 84,000 of these
shares are deemed to be beneficially owned by Paul Sonnabend.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has an Audit Committee consisting of
Messrs. Abrams, Alden and Bower. 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. Bower, Paul Sonnabend, Roger P. Sonnabend, and Ms. Tempel. 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, and Peter J. Sonnabend, and Ms. 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 and Bower 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 1999 there were seven 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 1999. 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 1999.
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 LONG TERM COMPENSATION
-------------------------------------- -------------------------------------------------
RESTRICTED SECURITIES
NAME & PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ** ALL OTHER
POSITION YEAR SALARY BONUS * COMPENSATION AWARD OPTIONS/SAR'S PAYOUTS COMPENSATION
- ------------------------------ ---- -------- -------- ------------ ---------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger P. Sonnabend 1999 $418,374 $69,994 NONE NONE NONE NONE NONE
Chief Executive Officer 1998 418,374 74,722
1997 418,374 58,238
Paul Sonnabend 1999 396,158 66,277 NONE NONE NONE NONE NONE
Chairman of Exec. Comm. 1998 396,158 70,754
& CFO 1997 396,158 55,145
Stephen Sonnabend 1999 280,395 46,910 NONE NONE NONE NONE NONE
Senior Vice President 1998 280,395 50,079
1997 280,395 39,031
Felix Madera *** 1999 348,000 60,390 NONE NONE NONE NONE NONE
Vice President, International 1998 203,500 37,205
1997 93,600 13,029
Hans U. Wandfluh 1999 255,000 66,100 NONE NONE NONE NONE NONE
Vice President; President &
General 1998 235,000 58,750
Manager, Royal Sonesta Hotel, 1997 225,000 52,643
New Orleans
</TABLE>
- ------------
* These bonuses were paid under the Company's incentive compensation plan
(see p.12)
** Long Term Incentive Plan
*** A portion of Mr. Madera's compensation is charged to the Company's
Corporate Office, and a portion is charged to Sonesta Beach Resort Key
Biscayne. Until July 1998, when the Company acquired ownership of the
Resort, only the portion paid by the Corporate Office is reflected in the
Summary Compensation Table.
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, 2000, 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. The total incentive
bonus paid out during each year is capped at 25% of base salary. 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), Key Biscayne 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................. $30,146 $40,194 $50,243 $54,262 $54,262
$150,000................. $37,090 $49,453 $61,817 $66,762 $66,762
$175,000................. $44,034 $58,713 $73,391 $79,262 $79,262
$200,000................. $50,979 $67,972 $84,965 $91,762 $91,762
$225,000................. $57,923 $77,231 $96,539 $104,262 $104,262
$250,000................. $64,868 $86,490 $108,113 $116,762 $116,762
$300,000................. $78,757 $105,009 $130,000 $130,000 $130,000
$350,000................. $92,646 $123,528 $130,000 $130,000 $130,000
$400,000................. $106,535 $130,000 $130,000 $130,000 $130,000
$450,000................. $120,423 $130,000 $130,000 $130,000 $130,000
$500,000................. $130,000 $130,000 $130,000 $130,000 $130,000
</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 1999 the maximum benefit allowable under the Employee Retirement Income
Security Act of 1974 is $130,000.
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 11, Hans Wandfluh has 27 years
of credited service, and Felix Madera has 18 years of credited service.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation paid to Company executives continues to be based largely of
two components: base salary and cash incentive bonus program. In reviewing,
approving and administering executive compensation, the Compensation Committee,
which is comprised solely of non-management directors, considers several
factors, including job responsibilities, job performance, the compensation paid
to executives holding similar positions in other companies of comparable size
and complexity to the Company, the performance and financial condition of the
Company, factors unique to the Company, and changes in the cost of living.
13
<PAGE>
When it met in January 1999 to consider the base salaries to be paid to the
chief executive officer and the executives named in the Summary Compensation
Table for 1999, the Compensation Committee noted the strong performance in 1998
of the Company's hotels in Boston (Cambridge), Massachusetts and Key Biscayne,
Florida; its leased hotel in New Orleans, Louisiana; and the improved results
and superior guest experience enjoyed at its resort hotel in Anguilla, B.W.I.
During 1998, the Company continued the renovation of its guestrooms at Royal
Sonesta Hotel, Boston; reacquired ownership of Sonesta Beach Resort, in Key
Biscayne, Florida, and instituted a major renovation program at the Resort
including redesigning the pool area and upgrading all guestrooms; and licensed a
5-star property in Lima, Peru. Based on these factors, the Committee, on
Management's recommendation, approved base salary increases for all executive
officers of the Company, except the chief executive officer, the chairman of the
executive committee, and senior vice president, who for the fourth consecutive
year received no increase in base salary. The increase in base salary for Hans
U. Wandflluh was 12.5%, and the increase for Jacqueline, Peter and Stephanie
Sonnabend was 10%.
The second component of executive 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
the plan based on 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 has not maintained a stock option plan for several years and
none of the executive officers named in the Summary Compensation Table presently
hold 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 three of the
five named executive officers are 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, 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, 1994 and ending
December 31, 1999.
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 04/14/2000 including data to 12/31/1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY MARKET
<S> <C> <C> <C>
Index Index Peer Index
12/30/94 $100.000 $100.000 $100.000
1/31/95 $96.504 $100.527 $95.428
2/28/95 $100.000 $105.809 $98.074
3/31/95 $95.105 $108.953 $96.080
4/28/95 $93.706 $112.385 $104.113
5/31/95 $90.909 $115.289 $110.527
6/30/95 $96.783 $124.622 $119.940
7/31/95 $101.053 $133.774 $126.595
8/31/95 $103.900 $136.490 $124.625
9/29/95 $93.225 $139.634 $117.639
10/31/95 $72.587 $138.829 $106.754
11/30/95 $74.011 $142.086 $108.770
12/29/95 $71.560 $141.335 $110.943
1/31/96 $90.546 $142.042 $111.977
2/29/96 $93.466 $147.457 $107.680
3/29/96 $94.927 $147.952 $108.169
4/30/96 $97.848 $160.210 $121.783
5/31/96 $99.308 $167.557 $135.896
6/28/96 $101.087 $160.004 $140.976
7/31/96 $108.520 $145.764 $131.527
8/30/96 $117.439 $153.954 $132.769
9/30/96 $126.358 $165.725 $143.573
10/31/96 $128.588 $163.882 $139.304
11/29/96 $118.182 $174.044 $137.993
12/31/96 $120.624 $173.898 $138.389
1/31/97 $117.609 $186.240 $136.640
2/28/97 $118.363 $175.937 $140.185
3/31/97 $118.363 $164.466 $121.382
4/30/97 $111.578 $169.591 $128.479
5/30/97 $111.578 $188.793 $132.149
6/30/97 $112.621 $194.600 $135.078
7/31/97 $113.387 $215.102 $138.472
8/29/97 $122.581 $214.784 $153.723
9/30/97 $124.113 $227.516 $156.001
10/31/97 $140.201 $215.662 $141.637
11/28/97 $183.871 $216.800 $145.459
12/31/97 $173.468 $213.067 $132.284
1/30/98 $185.859 $219.811 $131.145
2/27/98 $173.468 $240.479 $139.068
3/31/98 $176.566 $249.366 $132.235
4/30/98 $173.468 $253.569 $137.524
5/29/98 $145.589 $239.480 $129.724
6/30/98 $153.722 $256.207 $120.573
7/31/98 $191.368 $253.220 $114.578
8/31/98 $171.761 $203.026 $88.637
9/30/98 $167.840 $231.195 $84.201
10/30/98 $166.271 $241.359 $87.566
11/30/98 $174.114 $265.891 $92.399
12/31/98 $171.191 $300.431 $90.548
1/29/99 $163.266 $344.017 $98.973
2/26/99 $145.830 $313.166 $100.977
3/31/99 $126.808 $336.721 $98.758
4/30/99 $125.223 $347.520 $104.207
5/28/99 $139.489 $338.248 $106.692
6/30/99 $163.033 $368.444 $119.460
7/30/99 $216.842 $361.925 $114.028
8/31/99 $204.796 $377.049 $100.592
9/30/99 $165.443 $377.376 $98.073
10/29/99 $170.261 $406.822 $85.816
11/30/99 $193.552 $454.354 $68.669
12/31/99 $205.833 $555.988 $63.403
</TABLE>
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, and Jean C. Tempel throughout 1999.
CERTAIN RELATIONSHIPS/TRANSACTIONS
Mr. George S. Abrams, a Director of the Company, performed legal services
for the Company during 1998, 1999 and 2000.
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, 1999 through March 1, 2000 have totaled $205,135 including
$23,875 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, 2000 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)....................................... 240,996(3) 6.5%
c/o Sonesta Beach Resort
350 Ocean Drive
Key Biscayne, FL 33149
Jacqueline Sonnabend........................................ 205,550(4) 5.5%
200 Clarendon Street
Boston, MA 02116
Paul Sonnabend (2).......................................... 955,228 25.7%
200 Clarendon Street
Boston, MA 02116
Peter J. Sonnabend (2)...................................... 212,224(5) 5.7%
200 Clarendon Street
Boston, MA 02116
Roger P. Sonnabend (2)...................................... 1,061,202 28.6%
200 Clarendon Street
Boston, MA 02116
Stephanie Sonnabend (2)..................................... 222,750(6) 6.0%
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)....................................... 387,220 10.4%
200 Clarendon Street
Boston, MA 02116
All executive officers and Directors as a group (17 persons
including those noted above)................................ 2,212,873 60.0%
</TABLE>
- ---------
(1) See note 1 on Page 9.
(2) 2,394,650 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, 215,844 are deemed to be beneficially owned by Roger P.
Sonnabend.
(4) Of these shares, 182,394 are deemed to be beneficially owned by Roger P.
Sonnabend.
(5) Of these shares, 143,400 are deemed to be beneficially owned by Paul
Sonnabend.
(6) Of these shares, 199,594 are deemed to be beneficially owned by Roger P.
Sonnabend.
PREFERRED STOCK
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER 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 (17 persons
including above).......................................... 2,000 18.7%
</TABLE>
- ---------
(1) See note 1 on Page 9.
(2) On April 1, 2000 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>
Felix Madera and Hans U. Wandfluh, who are referenced in the Summary
Compensation Table on Page 11, are the beneficial owners of the following
amounts of Common Stock: Felix Madera: 4,000 shares; Hans U. Wandfluh: 8,000
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 2000. 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 that stockholders intend to present 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, 2001.
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 20, 2000
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
