<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant: [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
FELCOR LODGING TRUST INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
(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
[GRAPHIC OMITTED]
NOTICE OF ANNUAL MEETING
ON MAY 24, 2000
AND PROXY STATEMENT
FELCOR LODGING TRUST INCORPORATED
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
April 10, 2000
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders
on May 24, 2000, in Dallas, Texas. The meeting will be held at our Embassy
Suites (Market Center) hotel, 2727 Stemmons Freeway, Dallas, Texas at 9:00 a.m.
Dallas time. At the meeting, you will hear a report on our 1999 results.
This booklet includes the formal notice of the meeting and the Proxy
Statement. The Proxy Statement tells you about the matters to be addressed and
the procedures for voting at the meeting. It also describes how the Board
operates, gives personal information about our director candidates, and provides
other information about the Company.
Your vote is very important Even if you have only a few shares, we want
your shares to be represented at the meeting. I urge you to vote promptly in
order to be certain your shares are represented at the meeting.
I look forward to seeing you at the meeting.
Sincerely,
/s/ THOMAS J. CORCORAN, JR.
Thomas J. Corcoran, Jr.
President & Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF FELCOR LODGING TRUST INCORPORATED
Time: 9:00 a.m., Central Time
Date: May 24, 2000
Place: Embassy Suites (Market Center)
2727 Stemmons Freeway
Dallas, Texas 75207
Purposes: o To elect three directors to three-year terms;
o To approve an amendment to the Company's 1998 Restricted
Stock and Stock Option Plan; and
o To conduct any other business that may properly be raised.
Who may vote: Stockholders of record on March 28, 2000.
Annual Report: A copy of the Annual Report is enclosed.
Date of Mailing: This notice, together with the Proxy Statement and Annual
Report, are first being mailed to stockholders on or about
April 10, 2000.
Sincerely,
/s/ LAWRENCE D. ROBINSON
Lawrence D. Robinson
Secretary
April 10, 2000
<PAGE> 4
PROXY STATEMENT
FELCOR LODGING TRUST INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2000
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
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<S> <C>
GENERAL INFORMATION...................................................... 1
ELECTION OF DIRECTORS.................................................... 2
Nominees for Election as Class III Directors........................ 3
Continuing Directors................................................ 3
Director Compensation............................................... 5
Board Committees.................................................... 6
AMENDMENT OF 1998 OPTION PLAN............................................ 6
STOCK OWNERSHIP.......................................................... 9
Principal Stockholders.............................................. 9
Ownership by Directors and Officers................................. 10
MANAGEMENT............................................................... 11
Executive Officers of FelCor........................................ 11
Executive Compensation Tables....................................... 13
Compensation Committee Report....................................... 14
Compensation Committee Iterlocks.................................... 17
Certain Relationships and Related Transactions...................... 17
Section 16(a) Compliance............................................ 18
STOCK PERFORMANCE GRAPH.................................................. 18
ADDITIONAL INFORMATION................................................... 19
</TABLE>
<PAGE> 5
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of FelCor Lodging Trust Incorporated of proxies to be voted
at the Annual Meeting of Stockholders being held on Wednesday, May 24, 2000, and
at any adjournment of the meeting. The following questions and answers provide
important information about the Annual Meeting and this Proxy Statement.
WHAT AM I VOTING ON?
o The election of three directors, each for a three year term;
o An amendment to FelCor's 1998 Restricted Stock and Stock Option Plan (the
"1998 Plan"); and
o Any other matters properly brought before the meeting.
WHO IS ENTITLED TO VOTE?
FelCor stockholders of record at the close of business on March 28, 2000, are
entitled to vote at the meeting.
HOW DO I VOTE?
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting. If you have shares held by a broker or other nominee, you may
instruct your broker or nominee to vote your shares by following the
instructions that the broker or nominee provides you. Most brokers offer voting
by mail, telephone and Internet.
HOW DO PROXIES WORK?
The Board of Directors of FelCor is asking for your proxy. Giving your proxy to
the persons named by us, means you authorize them to vote your shares at the
meeting in the manner you direct. You may vote for all, some, or none of our
director candidates.
If you sign and return the enclosed proxy card but do not specify how your
shares are to be voted, your shares will be voted FOR the election of all of our
director candidates and FOR the adoption of the amendment to FelCor's 1998
Restricted Stock and Stock Option Plan.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are covered by one card. If you also
hold shares through a broker or other nominee, you may also get material from
them asking how you want to vote. To be sure that all of your shares are voted,
we encourage you to respond to each request you receive.
HOW DO I REVOKE A PROXY?
You may revoke your proxy before it is voted by submitting a new proxy with a
later date; by voting in person at the meeting; or by notifying FelCor's
Secretary in writing at the address listed under "Questions" on page 19.
WILL MY SHARES BE VOTED IF I DON'T SIGN A PROXY?
If you hold your shares directly in your own name, they will not be voted unless
you provide a proxy. Under certain circumstances, shares which you own that are
held by a broker may be voted even if you do not provide voting instructions to
the broker. Brokerage firms have the authority under the New York Stock Exchange
rules to vote customers' unvoted shares on certain "routine" matters, including
the election of directors.
WHAT CONSTITUTES A QUORUM?
In order to carry on the business of the meeting, we must have a quorum. This
means that at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either by proxy or in person. Shares owned by
FelCor are not voted and do not count for this purpose. On the record date, we
had 55,752,852 shares of Common Stock outstanding and entitled to vote at the
meeting.
HOW MANY VOTES NEEDED ARE NEEDED FOR
APPROVAL?
The three director candidates receiving the most "FOR" votes will be elected to
the three seats on the Board to be filled at the meeting. Abstensions,
withholding authority to vote for a candidate and
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<PAGE> 6
broker non-votes (described below) will only reduce the number of votes a
candidate receives.
Approval of the 1998 Plan amendment requires the affirmative vote of a majority
of the shares present in person or by proxy and entitled to vote at the meeting.
For this purpose, an abstention will have the same effect as a vote against the
amendment. Broker non-votes will not be counted as a vote either for or against
the amendment and will not be counted in determining the number of shares
entitled to vote on the amendment.
A "broker non-vote" occurs when a broker submits a proxy but does not vote for
or against a matter. This will occur when the beneficial owner has not
instructed the broker how to vote and the broker does not have discretionary
authority to vote in the absence of instructions.
WHAT SHOULD I DO IF I WANT TO ATTEND IN PERSON?
Only stockholders of record, their proxy holders, and invited guests may attend
the meeting. If you wish to vote in person and your shares are held by a broker
or nominee, you will need to obtain a proxy from the broker or nominee
authorizing you to vote your shares held in their name.
ELECTION OF DIRECTORS
The Board of Directors of FelCor has nominated the three director candidates
named below.
Our Board of Directors oversees the management of the Company on your behalf.
The Board reviews FelCor's long-term strategic plans and exercises direct
decision-making authority on key issues, such as the declaration of dividends,
the selection of the Chief Executive Officer, setting the scope of his authority
to manage the Company's day-to-day operations, and evaluation of his
performance.
Six of FelCor's ten directors, including two of our three nominees, are
Independent Directors. "Independent Directors" are not officers or employees of
FelCor or any of its affiliates; or officers, employees or affiliates of any
lessee of property from FelCor, any subsidiary of FelCor, or any partnership
that is an affiliate of FelCor.
FelCor's Charter and Bylaws provide for three classes of directors, who serve
staggered three- year terms expiring at the annual meeting of stockholders three
years following their election. The FelCor Board has nominated for re-election
each of the three persons currently serving as Class III directors, whose terms
are expiring at the 2000 annual meeting of stockholders. If elected, each of
these persons will serve until the annual meeting of stockholders in 2003.
Personal information on each of our nominees, and on each of the other directors
who will continue to serve on FelCor's Board following the annual meeting, is
given below.
The FelCor Board of Directors met six times during 1999. On average, FelCor's
directors attended 90% of the Board and committee meetings held during 1999.
Only Mr. Mathewson and Mr. Rose attended fewer than 75% of the meetings of the
Board and Board committees on which they served.
If a director nominee becomes unavailable to serve before the election, your
proxy card authorizes the named proxies to vote for a replacement nominee if the
Board names one.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION AS CLASS III DIRECTORS DESCRIBED ON THE FOLLOWING PAGE.
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<PAGE> 7
NOMINEES FOR ELECTION AS CLASS III DIRECTORS (TERMS EXPIRING IN 2003)
RICHARD S. ELLWOOD Mr. Ellwood, a director of FelCor since its
Age 68 formation in 1994, is the founder and President of
R.S. Ellwood & Co., Inc., a real estate investment
banking firm which was organized in 1987. Prior to
1987, as an investment banker, Mr. Ellwood was
elected successively in 1963 a vice president of
Morgan Guaranty Trust Company, in 1968 a general
partner of White Weld & Co., in 1978 a managing
director of Warburg Paribas Becker, Incorporated
and in 1984 a managing director and senior banker
of Merrill Lynch Capital Markets. Mr. Ellwood has
extensive experience in hotel financing. He was a
founder of Hotel Investors Trust, a REIT, and
served as a trustee from 1970 until its merger
with another REIT in 1987. He is currently a
director of Apartment Investment and Management
Company and Florida East Coast Industries, Inc.
RICHARD O. JACOBSON Mr. Jacobson has served as a director of FelCor
Age 63 since its formation in 1994 and is the Chairman of
the Board of Jacobson Warehouse Company, Inc., a
privately held warehouse company with facilities
in 30 locations in eight states, which Mr.
Jacobson founded 32 years ago. He is also Chairman
of the Board of Jacobson Transportation Company,
Inc., a truckload common carrier with authority to
operate in the United States (48 states) and
Canada. Mr. Jacobson is a member of the boards of
directors of Atrion Corporation, Firstar Bank Des
Moines, N.A., Firstar Bank of Iowa, N.A. and
Heartland Express, Inc.
CHARLES N. MATHEWSON Mr. Mathewson has served as a director of FelCor
Age 71 since its formation in 1994. Additionally, Mr.
Mathewson has served, for more than the past five
years, in various positions with International
Game Technology (IGT), a company engaged in the
design and manufacture of microprocessor based
gaming products and gaming monitoring systems. Mr.
Mathewson joined IGT's Board of Directors in 1985
and, in February 1986, he became the Chairman of
the Board. In December 1986, he also became the
President and Chief Executive Officer of IGT. In
February 1988, he resumed his position as Chairman
of the Board and Chief Executive Officer of IGT.
Mr. Mathewson is also a member of the board of
directors of Baron Asset Fund.
CONTINUING DIRECTORS
Continuing Class I Directors (Terms expiring in 2001)
CHARLES A. LEDSINGER, JR. Mr. Ledsinger has served as a director of FelCor
Age 50 since November 1997. Mr. Ledsinger became the
President and Chief Executive Officer of Choice
Hotels International in August 1998. Prior to that
time, Mr. Ledsinger served as Senior Vice
President and Chief Financial Officer of St. Joe
Corporation from May 1997 until his election as
President and Chief Operating Officer of that
corporation in February 1998. From June 1995 until
May 1997, Mr. Ledsinger was Senior Vice President
and Chief Financial Officer of Harrah's
Entertainment, Inc. For more than three years
prior to that, Mr. Ledsinger served as Senior Vice
President and Chief Financial Officer of The
Promus Companies Incorporated, the former parent
of Harrah's Entertainment, Inc. He is also a
director of Choice Hotels International, TBC
Corporation and Friendly Ice Cream Corporation. He
is a past co-chairman of the Real Estate Financial
Advisory Council of the American Hotel and Motel
Association.
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<PAGE> 8
ROBERT H. LUTZ, JR. Mr. Lutz served as a director of Bristol Hotel
Age 50 Company from December 1995 until its merger into
FelCor in July 1998, and has served as a director
of FelCor since that time. Since 1994, Mr. Lutz
has been the Chairman and Chief Executive Officer,
and is a member of the executive committee, of
Amresco, Inc. a financial services company. From
1991 to 1994, Mr. Lutz served as President and
Chief Operating Officer of Balcor/Allegiance
Realty Group, a subsidiary of American Express
Company engaged in real estate ownership and
management.
MICHAEL D. ROSE Mr. Rose has served as a director of FelCor since
Age 58 July 1998. He served as the Chairman of the Board
of Promus Hotel Corporation from April 1995
through December 1997 and, thereafter, as a
director until December 1998. Mr. Rose served as
Chairman of the Board of Harrah's Entertainment
Inc. from June 1995 until his retirement as of
December 31, 1996. He also served as Chairman of
the Board of The Promus Companies Incorporated
from November 1989 through June 1995 and as Chief
Executive Officer from November 1989 to April
1994. Mr. Rose is also a director of Ashland,
Inc., First Tennessee National Corporation,
General Mills, Inc., Stein Mart, Inc., Resortquest
International, Inc. and Darden Restaurants, Inc.
Continuing Class II Directors (Terms expiring in 2002)
THOMAS J. CORCORAN, JR. Mr. Corcoran is the President and Chief Executive
Age 51 Officer of FelCor and has served in that capacity
since its formation in 1994. From 1991 to 1994,
Mr. Corcoran held the same positions with the
general partner of the partnerships that were
merged into FelCor at its formation. From October
1990 to December 1991, he served as the Chairman,
President and Chief Executive Officer of Fiesta
Foods, Inc., a manufacturer of tortilla chips and
taco shells. From 1979 to 1990, Mr. Corcoran held
various positions with ShowBiz Pizza Time, Inc.
(now CEC Entertainment, Inc.), an operator and
franchisor of family entertainment center/pizza
restaurants, and with Integra - A Hotel and
Restaurant Company (formerly Brock Hotel
Corporation). He served as the President and Chief
Executive Officer of Integra from 1986 to 1990.
THOMAS A. MCCHRISTY Mr. McChristy has served as a director of FelCor
Age 73 since its formation in 1994. He was the President
of T. A. McChristy Co., Inc., a real estate
investment company from 1957 to 1996. Mr.
McChristy also served as the President and Chief
Operating Officer of Syntech International, Inc.,
a lottery systems and equipment manufacturing
company, from 1986 to 1988 and as its Chief
Executive Officer from 1989 to 1992.
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<PAGE> 9
DONALD J. MCNAMARA Mr. McNamara was the Chairman of the Board of
Age 47 Bristol Hotel Company from November 1994 until its
merger into FelCor in July 1998. Since the merger,
he has served as the Chairman of the Board of
FelCor. Mr. McNamara previously served as a
director of FelCor from July 1994 until November
1997. He is also the Chairman of The Hampstead
Group, a private equity real estate investment
company, and is an affiliate of certain
partnerships owning, in the aggregate,
approximately 39.9% of the outstanding common
stock of Bristol Hotels & Resorts and
approximately 17.3% of FelCor's outstanding Common
Stock. Subsidiaries of Bristol Hotels & Resorts
leased 100 of FelCor's hotels at December 31,
1998.
RICHARD C. NORTH Mr. North served as a director of Bristol Hotel
Age 50 Company from 1997 until its merger into FelCor in
July 1998, and has served as a director of FelCor
since that time. Mr. North has been the Group
Finance Director of Bass plc since 1994. Bass plc
is the parent of Bass Hotels & Resorts, Inc.,
which operates or franchises more than 2,700
hotels in more than 75 countries under various
brands, including Crowne Plaza(R) and Holiday
Inn(R). Prior to 1994, Mr. North served as the
Group Finance Director of The Burton Group.
Subsidiaries of Bass plc beneficially own
approximately 49.6% of the outstanding common
stock of Bristol Hotels & Resorts and have
announced a definitive merger agreement pursuant
to which they expect to acquire the remaining
shares of Bristol Hotels & Resorts during April
2000. Subsidiaries of Bass plc also own
approximately 8.8% of the outstanding Common Stock
of FelCor. In addition, subsidiaries of Bass plc
also own an aggregate of 4,713,185 Units of
limited partner interest in FelCor Lodging Limited
Partnership. Under certain circumstances, these
Units may be redeemed for a like number of shares
of FelCor Common Stock. If so redeemed, Bass plc
and its affiliates would own approximately 16.0%
of FelCor's Common Stock.
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DIRECTOR COMPENSATION
In lieu of cash compensation for their services in 1999, FelCor will issue to
each director, except as described below, that number of shares of FelCor Common
Stock determined by dividing (i) the sum of $35,000 plus, if a director attended
more than five Board meetings during the year, $1,000 for each additional
meeting attended in person and $500 for each additional telephonic meeting in
which he participated, by (ii) $17.125, the closing price of the Common Stock on
February 24, 2000, date the issuance was authorized by the Board, and rounding
to the nearest whole lot of 100 shares. In addition to such compensation, each
director is reimbursed for out-of-pocket expenses incurred in connection with
his service on the FelCor Board. No additional compensation is paid to directors
for service on various Board committees.
The number of shares of FelCor Common Stock to be issued to each director for
his services during 1999 is set forth below:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ---- ----------------
<S> <C>
Donald J. McNamara 2,100
Thomas J. Corcoran, Jr. 2,100
Richard S. Ellwood 2,000
Richard O. Jacobson 2,100
Charles A. Ledsinger, Jr. 2,000
Robert H. Lutz, Jr. 2,100
Charles N. Mathewson 2,000
Thomas A. McChristy 2,100
Michael D. Rose 2,000
</TABLE>
Mr. North is not permitted by his employer to accept any compensation for his
services as a director of FelCor.
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<PAGE> 10
Director compensation will be determined in a manner similar to that described
above for services during 2000.
BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
committees work on key issues in greater detail than would be practicable at a
full Board meeting. Each committee reviews the results of its meetings with the
full Board. Donald J. McNamara, the Chairman of the Board, is an ex-officio
member of all committees.
The Executive Committee was established to exercise broad powers on behalf of
the Board. In practice, the committee only meets when it is impractical to call
a meeting of the full Board. The Executive Committee is comprised of Donald J.
McNamara (Chairman), Thomas J. Corcoran, Jr., Robert H. Lutz, Jr. and Charles N.
Mathewson.
No meetings of the Executive Committee were held during 1999.
The Audit Committee oversees audits, accounting, financial reporting, and
internal control matters. The Audit Committee selects the independent public
accountants to audit FelCor's financial statements. The committee consults with
the independent accountants and reviews their audit and other work. The
committee also consults with FelCor's Chief Financial Officer and Chief
Accounting Officer, and reviews FelCor's internal controls and compliance with
policies.
During 1999, the committee met prior to each release of earnings by FelCor to
review the earnings reported and to examine any issues relating to the report of
such earnings. The directors serving on the Audit Committee are Charles A.
Ledsinger, Jr. (Chairman), Richard S. Ellwood, Richard O. Jacobson and Richard
C. North.
The Audit Committee held six meetings during 1999.
The Compensation Committee determines the compensation to be paid to FelCor's
senior executive officers and advises the Board on the adoption of, and
administers employee benefit and compensation plans. The Compensation Committee
is comprised of Michael D. Rose (Chairman), Thomas A. McChristy, Richard S.
Ellwood and Robert H. Lutz, Jr.
The Compensation Committee held one meeting during 1999.
The Capital Approval Committee currently consists of three of FelCor's officers,
Thomas J. Corcoran, Jr. (President and Chief Executive Officer), Lawrence D.
Robinson (Senior Vice President, General Counsel and Secretary), and Andrew J.
Welch (Vice President and Treasurer). The Board has delegated to this committee
the authority to approve, and authorize actions taken in connection with, the
acquisition, improvement, disposition or financing of hotel assets by FelCor
within specified limits.
The Capital Approval Committee took action only by written consent during 1999.
------------------------------------
AMENDMENT OF 1998 PLAN
PROPOSED AMENDMENT
The 1998 Restricted Stock and Stock Option Plan, covering an aggregate of up to
1,000,000 shares of FelCor Common Stock, was adopted by FelCor's Board in
November 1997 and approved by stockholders at the 1998 Annual Meeting. The 1998
Plan authorizes the Compensation Committee to grant awards of stock options
and/or restricted stock to qualifying employees, with the limitation that not
more than 50,000 shares be awarded as restricted stock.
The FelCor Board has approved, and recommends to FelCor's stockholders that they
adopt, an amendment to the 1998 Plan to remove the limitation on the number of
shares that may be awarded as restricted stock. The FelCor Board believes this
amendment will
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provide the Company with the necessary flexibility to continue the purpose of
the 1998 Plan by providing incentives to attract and retain qualified officers,
directors and key employees, upon whose judgment the Company is largely
dependent. As provided in the Report of the Compensation Committee set forth
later in this Proxy Statement, the Compensation Committee believes that stock
options have not provided the level of incentives necessary to achieve this
purpose and, for this reason, the Compensation Committee believes it needs the
flexibility to award additional shares of restricted stock, in lieu of stock
options.
THE AMENDMENT WOULD NOT INCREASE THE TOTAL NUMBER OF SHARES AVAILABLE UNDER THE
1998 PLAN.
At March 15, 2000, a total of 685,559 shares were available to be awarded under
the 1998 Plan, but only 45,000 shares were available to be awarded as restricted
stock. The Compensation Committee has indicated that, if the proposed amendment
is adopted by the stockholders, it intends to award shares of restricted stock
to certain officers and employees of FelCor during 2000, which will vest over
five years at 20% per year, as follows:
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME VALUE(1) OF SHARES
- ---- ---------- ----------
<S> <C> <C>
Thomas J. Corcoran, Jr $ 543,150 30,600
Lawrence D. Robinson 417,125 23,500
William P. Stadler 417,125 23,500
Jack Eslick 417,125 23,500
June H. McCutchen 417,125 23,500
All executive officers
as a group (8 persons) 3,463,025 195,100
All non-executive officers
and employees as a
group (6 persons) 266,250 15,000
</TABLE>
- ----------
(1) Represents the closing price of the shares on April 3, 2000 ($17.75), the
date of grant, without giving effect to the diminution of value
attributable to the restrictions on such stock.
The amendment to the 1998 Plan will be approved by FelCor's stockholders if a
quorum is present at the Annual Meeting and if the number of votes cast for
approval of the amendment to the 1998 Plan exceeds the number of votes cast
against it.
THE FELCOR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
AMENDMENT TO THE 1998 PLAN.
THE 1998 PLAN, AS AMENDED
The following summarizes certain significant aspects of the FelCor 1998 Plan, as
amended. This summary is not intended to be complete and is subject in all
respects to the terms of the FelCor 1998 Plan
Share Authorization. The FelCor 1998 Plan provides for the grant of stock
options to purchase a specified number of shares of FelCor Common Stock
("Options") or grants of FelCor Common Stock ("Restricted Stock"). Under the
FelCor 1998 Plan, the total number of shares available for grant is equal to
1,000,000 shares of FelCor Common Stock, which may be grants of Options or
Restricted Stock. Upon the occurrence of certain extraordinary events, the
FelCor Board or the Compensation Committee may make such adjustments in the
aggregate number and kind of shares reserved for issuance, the number of shares
and kind covered by outstanding awards and the exercise prices specified therein
as may be determined to be appropriate.
Purpose and Administration. The FelCor Board has approved the FelCor 1998 Plan
to provide incentives to attract and retain Independent Directors, executive
officers and key employees. The FelCor 1998 Plan is administered by the
Compensation Committee or, in the case of grants to Independent Directors, by
the FelCor Board. The Compensation Committee generally has the authority, within
limitations set forth in the FelCor 1998 Plan, (i) to establish rules and
regulations concerning the FelCor 1998 Plan, (ii) to determine the persons to
whom Options and Restricted Stock may be granted, (iii) to fix the number of
shares of FelCor Common Stock to be covered by each Option and the number of
shares of Restricted Stock granted, and (iv) to set the terms and provisions of
each grant of Options or Restricted Stock to be granted. The Compensation
Committee has the right to cancel any outstanding Options and to issue new
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<PAGE> 12
Options on such terms and upon such conditions as may be consented to by the
optionee affected. Eligibility. Participants in the FelCor 1998 Plan may be
directors, officers or employees of the Company, its subsidiaries (including
FelCor Lodging Limited Partnership) or designated affiliates, as are selected by
the Compensation Committee.
Options. Options granted under the FelCor 1998 Plan may be incentive stock
options ("ISOs") under Section 422 of the Code or non- qualified options, at the
discretion of the Compensation Committee. The FelCor 1998 Plan provides that the
exercise price of an Option will be fixed by the Compensation Committee on the
date of grant; however, the exercise price of an ISO must be not less than the
fair market value of a share of Common Stock on the date of the grant. In the
case of an ISO granted to any person who owns, directly or indirectly, stock
possessing more than 10% of the total combined voting power of all classes of
FelCor's stock ("Ten Percent Owner"), the option price will not be less than
110% of the Fair Market Value of a share of FelCor Common Stock on the date of
grant. Each Option must expire within ten years from the date of the grant
except that any ISO granted to a Ten Percent Owner must expire within five years
from the date of the grant. Moreover, Options granted under the FelCor 1998 Plan
will not be ISOs to an individual participant to the extent that the aggregate
fair market value of the FelCor Common Stock with respect to which such Options
under the FelCor 1998 Plan (or under any other plan maintained by the Company or
a subsidiary thereof) first become exercisable by such participant in any year
exceeds $100,000.
No Option may be exercised within six months after the date of grant or in such
circumstances where exercise would violate Federal or State securities laws.
Options will be non- transferable and non-assignable; provided, however, that
the estate of a deceased holder can exercise Options. Options generally will be
exercisable by the holder thereof subject to terms fixed by the Compensation
Committee. The right of any participant to exercise an Option may not be
transferred in any way other than by will or the laws of descent and
distribution.
Restricted Stock Awards. The FelCor 1998 Plan also permits the Compensation
Committee to grant Restricted Stock. Restricted Stock will be subject to the
terms and conditions imposed by the Compensation Committee. Except for such
restrictions on transfer as the Compensation Committee may impose, the
participants have all the rights of a holder of FelCor Common Stock as to such
Restricted Stock including the right to vote the shares and the right to receive
any cash distributions. Except as provided by the Compensation Committee at the
time of grant or otherwise, upon termination of employment for any reason during
the restriction period, all unvested shares will be forfeited by the
participant.
Termination and Amendment. No Option shall be granted and no Restricted Stock
may be awarded under the FelCor 1998 Plan on or after November 1, 2007. The
FelCor Board may amend any award theretofore granted, prospectively or
retroactively. No such amendment may impair the rights of any participant under
any award without the consent of such participant (except for any amendment made
to cause the plan to qualify for an exemption provided by Rule 16b-3 under the
Exchange Act). The FelCor 1998 Plan may be terminated and may be modified or
amended by the FelCor Board at any time; however, (i) any modification or
amendment either increasing the aggregate number of shares which may be issued
under Options, increasing materially the benefits accruing to participants under
the FelCor 1998 Plan or materially modifying the requirements as to eligibility
to receive Options is subject to stockholder approval within one year of the
adoption of such amendment; and (ii) no such termination, modification or
amendment of the FelCor 1998 Plan will alter or affect the terms of any then
outstanding Options or Restricted Stock without the consent of the holders
thereof.
-8-
<PAGE> 13
Federal Income Taxes. No income is recognized by a participant in the FelCor
1998 Plan at the time the Option is granted. If the Option is an ISO, no income
will be recognized upon the participant's exercise of the Option. Income is
recognized by a participant when he disposes of shares acquired under an ISO.
The exercise of a nonqualified stock option generally is a taxable event that
requires the participant to recognize, as ordinary income, the difference
between the shares' fair market value and the option price.
A participant will recognize income on account of a Restricted Stock award on
the first day that the shares are either transferable or not subject to a
substantial risk of forfeiture. The amount of income recognized by the
participant is equal to the fair market value of the FelCor Common Stock
received on that date.
The employer (either FelCor or its affiliate) will be entitled to claim a
federal income tax deduction on account of the exercise of a nonqualified option
or the vesting of a stock award. The amount of the deduction is equal to the
ordinary income recognized by the participant. The employer will not be entitled
to a federal income tax deduction on account of the grant or the exercise of an
ISO.
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The table on the following page shows how much FelCor Common Stock was
beneficially owned on March 15, 2000, by each person known to FelCor to
beneficially own more than 5% of its Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------- ----------- ---------
<S> <C> <C>
Hampstead Genpar, L.P.; HHGenpar Partners;
Hampstead Associates, Inc.; RAW Genpar, Inc.;
InMed, Inc.; Donald J. McNamara;
Robert A. Whitman; and Daniel A. Decker............................... 9,630,878(2) 17.3%
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
Bass plc.............................................................. 4,905,558(3) 8.8%
20 North Audley Street
London, England W1Y1WE
Franklin Resources, Inc............................................... 2,860,120(4) 5.1%
777 Mariners Island Blvd.
San Mateo, California 94403
</TABLE>
- ---------------------------
(1) Based upon 55,577,407 shares outstanding as of March 15, 2000.
(2) Based solely upon information contained in Schedule 13D, dated August 6,
1998. The named persons reported that they shared voting and dispositive
power with respect to 9,630,878 shares of Common Stock held of record by
United/Harvey Investors I, L.P., United/Harvey Investors II, L.P.,
United/Harvey Investors III, L.P., United/Harvey Investors IV, L.P., and
United/Harvey Investors V, L.P.
(3) Based solely upon information contained in Schedule 13D/A, dated February
29, 2000. Bass plc reported that, through its subsidiaries, it shared
voting and dispositive power with respect to 4,905,558 shares of Common
Stock.
(4) Based solely upon information contained in Schedule 13G, dated January 19,
2000. Franklin Resources, Inc. reported that, through its subsidiaries, it
had sole dispositive and voting power with respect to 2,860,120 shares of
Common Stock and sole voting power with respect to 2,851,920 shares of
Common Stock. Includes 1,627,920 shares of Common Stock issuable upon
conversion of 2,100,000 shares of FelCor's Series A Preferred Stock.
-9-
<PAGE> 14
OWNERSHIP BY DIRECTORS AND OFFICERS
The table on the following page shows how much FelCor Common Stock, Series A
Preferred Stock and Series B Preferred Stock was beneficially owned on March 15,
2000, by each executive officer named in the Summary Compensation Table on page
13, each nominee and continuing director, and all directors and executive
officers, as a group. Unless otherwise indicated, each person owns directly the
number of shares shown after his name below.
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND
AMOUNT AND NATURE OF NATURE OF
NATURE OF BENEFICIAL BENEFICIAL
BENEFICIAL PERCENT OWNERSHIP OF PERCENT OWNERSHIP OF PERCENT
NAME OF OWNERSHIP OF OF SERIES A OF SERIES B OF
BENEFICIAL OWNER COMMON STOCK CLASS(1) PREFERRED STOCK CLASS(1) PREFERRED STOCK CLASS(1)
- ---------------------------- ------------ ---------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Corcoran, Jr ..... 734,205(2) 1.3% 3,000 * 800 *
Richard S. Ellwood ......... 11,800(3) * 0 0 0 0
Richard O. Jacobson ........ 39,958 * 0 0 0 0
Charles A. Ledsinger, Jr ... 1,975 * 0 0 0 0
Robert H. Lutz, Jr ......... 24,514(4) * 0 0 0 0
Charles N. Mathewson ....... 1,347,493(5) 2.4 % 170,000(14) 2.8% 70,000(14) 1.2%
Thomas A. McChristy ........ 142,873(6) * 0 0 0 0
Donald J. McNamara ......... 9,637,078(7) 17.3% 0 0 0 0
Richard C. North ........... 0 0 0 0 0 0
Michael D. Rose ............ 44,425(8) * 0 0 0 0
Jack Eslick ................ 47,768(9) * 0 0 0 0
June H. McCutchen .......... 27,360(10) * 0 0 0 0
Lawrence D. Robinson ....... 98,377(11) * 0 0 0 0
William P. Stadler ......... 40,222(12) * 100 * 0 0
All executive officers and
directors as a group
(17 persons) ............ 12,237,024(13) 20.8% 173,100 2.9% 70,800 1.2%
</TABLE>
- ----------
* Represents less than 1% of the outstanding shares of such class.
(1) Based upon 55,577,407 shares of Common Stock, 6,050,000 shares of Series A
Preferred Stock and 5,750,000 Depository Shares representing 57,500 shares
of Series B Preferred Stock outstanding as of March 15, 2000.
(2) Includes 294,915 shares that FelCor, Inc. has the right to receive upon
redemption of FelCor Lodging Limited Partnership Units. Mr. Corcoran is a
50% stockholder and director of FelCor, Inc. and may be deemed to
beneficially own all of the Units owned by FelCor, Inc. Also includes (i)
an aggregate of 33,000 shares issued pursuant to stock grants (9,000 in
February 1995, 9,000 in December 1995, and 15,000 in February 1997), which
vest over a five-year period from the date of grant at 20% annually and of
which 25,200 shares are fully vested, (ii) 359,257 shares issuable pursuant
to stock options that are currently exercisable or exercisable within 60
days, (iii) 2,325 shares issuable upon conversion of 3,000 shares of Series
A Preferred Stock, (iv) 4,210 shares owned by his children, (v) 1,795
shares owned by his IRA, and (vi) 500 shares owned by Corcoran Investments,
L.L.C., a limited liability company wholly-owned by him.
(3) Includes (i) 2,200 shares held by trusts of which Mr. Ellwood is a
beneficiary and trustee, and (ii) 1,000 shares held by R. S. Ellwood & Co.,
Inc., of which Mr. Ellwood is the sole stockholder.
(4) Includes (i) 15,414 shares issuable pursuant to currently exercisable stock
options, and (ii) 2,500 shares owned by Mr. Lutz's spouse.
(5) Includes 540,009 shares representing Mr. Mathewson's pro rata interest in
partnerships having the right to receive Common Stock upon redemption of
FelCor Lodging Limited Partnership Units. Also includes 131,784 shares
issuable upon conversion of 170,000 shares of Series A Preferred Stock held
by the Charles N. Mathewson Trust.
(6) Includes (i) 101,503 shares held by the T. A. McChristy Living Trust, (ii)
4,200 shares held by his spouse's trust, (iii) 1,800 shares held by his
spouse's IRA, and (iv) 3,000 shares held by Mr. McChristy's IRA.
(7) Includes 9,630,878 shares held by United/Harvey Investors I, L.P.;
United/Harvey Investors II, L.P.; United/Harvey Investors III, L.P.;
United/Harvey Investors IV, L.P.; and United/Harvey Investors V, L.P.
("Partnerships"). Mr. McNamara is the sole stockholder and director of
Hampstead Associates, Inc., which is the managing general partner of HH
GenPar Partners. HH GenPar Partners is the managing general partner of
Hampstead GenPar, L.P., which is the general partner of each of the
Partnerships. Mr. McNamara disclaims beneficial ownership of the shares
held by the Partnerships, except to the extent of his pecuniary interest
therein.
(8) Includes (i) 21,600 shares owned by a trust for which Mr. Rose is the
trustee, (ii) 21,275 shares owned by a corporation controlled by Mr. Rose,
(iii) 750 shares owned by Mr. Rose's spouse, and (iv) 800 shares credited
to his account in the FelCor Deferred Compensation Plan.
(9) Includes 44,768 shares issuable pursuant to currently exercisable stock
options.
(10) Includes 27,360 shares issuable pursuant to currently exercisable stock
options.
-10-
<PAGE> 15
(11) Includes (i) 14,500 shares issued pursuant to stock grants, which shares
vest over a five-year period from the date of grant at 20% annually, of
which 8,700 shares are fully vested, (ii) 79,717 shares issuable pursuant
to currently exercisable stock options, (iii) 2,160 shares held by his IRA,
and (iv) 2,000 shares credited to his account in the FelCor Deferred
Compensation Plan.
(12) Includes (i) 37,644 shares issuable pursuant to currently exercisable stock
options, (ii) 2,500 shares issued pursuant to a stock grant, which vests
over a five-year period from the date of grant at 20% annually, of which
2,000 shares are fully vested and (iii) 77 shares issuable upon conversion
of 100 shares of Series A Preferred Stock.
(13) See notes 2 through 12.
(14) Represents shares held by the Charles N. Mathewson Trust.
------------------------------------------
MANAGEMENT
EXECUTIVE OFFICERS OF FELCOR
The current executive officers of FelCor, their ages, positions held and tenure
is set forth in the table below.
<TABLE>
<CAPTION>
OFFICER
NAME AGE POSITION(S) WITH FELCOR SINCE
- ---- --- ----------------------- ------
<S> <C> <C> <C>
Thomas J. Corcoran, Jr........................ 51 President, Chief Executive Officer and 1994
Director
Lawrence D. Robinson.......................... 56 Senior Vice President, General 1996
Counsel and Secretary
William P. Stadler............................ 45 Senior Vice President, Director of 1995
Corporate Acquisitions
Jack Eslick................................... 48 Senior Vice President, Director of 1996
Asset Management
June H. McCutchen............................. 44 Senior Vice President, Director of 1995
Design and Construction
Larry J. Mundy................................ 49 Senior Vice President, Director of 1998
Administration and Business Initiatives
Andrew J. Welch............................... 38 Vice President and Treasurer 1998
Lester C. Johnson............................. 47 Vice President and Controller 1995
</TABLE>
Business Experience of Executive Officers
Information concerning the business experience of THOMAS J. CORCORAN, JR. is set
forth above under "Election of Directors-Continuing Class II Directors."
LAWRENCE D. ROBINSON has served as the Senior Vice President, General Counsel
and Secretary of FelCor since May 1996. From 1972 to 1989, Mr. Robinson was a
partner in the Kansas City-based law firm of Stinson, Mag & Fizzell, for which
he founded and managed a Dallas, Texas office from 1982 to 1989. From 1989
through April 1996, Mr. Robinson was a partner in the Houston-based law firm of
Bracewell & Patterson, L.L.P., where he served as the managing partner of its
Dallas office until 1992, as the head of that office's corporate and securities
law section and as chairman of its firmwide hospitality group.
WILLIAM P. STADLER began his employment with FelCor in July 1995 as Vice
President, Director of Acquisition and Development. On January 14, 1998, Mr.
Stadler was promoted to Senior Vice President, Director of Corporate
Acquisitions. Mr. Stadler has more than 17 years of experience in hotel
acquisition and development, having served as Vice President Development for
Coastal Hotel Group from 1994 until he joined FelCor in 1995, as Vice
President-Development for Embassy Suites, Inc.
-11-
<PAGE> 16
from 1992 to 1994, as Senior Vice President- Development for Landmark Hotels,
Inc. from 1989 to 1991 and as Vice President- Development for Marriott
Corporation from 1985 to 1989.
JACK ESLICK joined FelCor in April 1996 as its Vice President, Director of Asset
Management. He was named Senior Vice President, Director of Asset Management in
1998. Mr. Eslick has more than 20 years experience in hotel operations. From
April 1991 until he joined FelCor, Mr. Eslick served as Vice President of
Operations of Promus Hotel Corporation, where he had direct responsibility for
all operations in a region that grew from 14 hotels to 26 hotels. Prior to April
1991, he served in various capacities with Holiday Inns, Inc., including serving
as general manager of various hotels and as a Regional Director of Operations.
JUNE H. MCCUTCHEN joined FelCor in October 1995 as Vice President, Director of
Design and Construction, and was named its Senior Vice President, Director of
Design and Construction in 1998. Prior to her engagement by FelCor, she was as
Account Executive for Hospitality Restoration & Builders, Inc. From 1992 to 1994
she was Project Manager for American General Hospitality, Inc. where she managed
all capital improvement work for more than 35 properties. Prior to 1992, Ms.
McCutchen was Project Manager for Hilton Hotels, Inc. from 1987 to 1992, and
prior to 1987, she served as design coordinator and purchasing manager for
Embassy Suites, Inc.
LARRY J. MUNDY joined FelCor in January 1998 as Senior Vice President, Director
of Hotel Acquisitions and was named Director of Administration and Business
Initiatives in February 2000. From 1995 until he joined FelCor, he was Vice
President of Franchise Development for Motel 6. From 1987 to 1995, he was Vice
President of Development in the South/Southeast for Hilton Hotels and prior to
1987 he served as corporate counsel for Residence Inns and Embassy Suites.
ANDREW J. WELCH joined FelCor in July 1998 and is FelCor's Vice President and
Treasurer. Prior to joining FelCor, Mr. Welch had served as Vice President and
Treasurer of Bristol Hotel Company from August 1977. Prior to joining Bristol,
Mr. Welch was responsible for originating investment banking and corporate
banking business for Bank of America, N.A., from October 1991 to August 1997,
Citibank, N.A., from January 1990 to October 1991, and NationsBank, N.A., from
May 1984 to January 1990.
LESTER C. JOHNSON joined FelCor in September 1995 as its Vice President and
Controller. Prior to joining FelCor, Mr. Johnson held various positions with
Integra - A Hotel and Restaurant Company and ShowBiz Pizza Time, Inc. (now CEC
Entertainment, Inc.) from 1981 to 1995. He served as the Vice President and
Controller of Integra from 1991 to 1995.
Terms of Office and Relationships
The officers of the Company are elected annually by the Board of Directors at a
meeting held following each annual meeting of stockholders, or as soon
thereafter as necessary and convenient in order to fill vacancies or newly
created offices. Each officer holds office until his successor is duly elected
and qualified or until death, resignation or removal, if earlier. Any officer or
agent elected or appointed by the Board of Directors may be removed by the Board
of Directors whenever in its judgement the best interests of the Company will be
served thereby, but such removal shall be without prejudice to the contractual
rights, if any, of the person so removed.
There are no family relationships among any of the directors or executive
officers of the Company. Except as described under "Election of Directors"
above, none of the Company's directors hold directorships in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 (the "Exchange Act") or pursuant to Section 15(d) of the Exchange
Act or any company registered as an investment company under the Investment
Company Act of 1940. There are no arrangements or understandings
-12-
<PAGE> 17
between any nominee for election as a director or officer and any other person
pursuant to which that director was nominated or officer was selected.
EXECUTIVE COMPENSATION TABLES
The following tables show the compensation of FelCor's President and the four
other most highly paid executives. See the Compensation Committee Report
beginning on page 14 for an explanation of our compensation philosophy.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- -------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($) ($) AWARDS($)(1) SARS(#) ($)(4)
- ------------------------------------ ---- --------- --------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J. Corcoran, Jr ............. 1999 325,000 None None None None 15,000
President and Chief ............. 1998 250,000 150,000 None None 324,953 15,000
Executive Officer ............... 1997 200,000 250,000 None 525,000 201,000 14,250
(2)
Lawrence D. Robinson ............... 1999 225,000 50,000 None None None 15,000
Senior Vice President, .......... 1998 175,000 95,000 None None 137,262 15,000
General Counsel & Secretary ..... 1997 115,500 27,500 None 87,500(3) 70,000 None
William P. Stadler ................. 1999 175,000 50,000 None None None 15,000
Senior Vice President, Direct ... 1998 150,000 151,250 None None 64,256 15,000
of Corporate Acquisitions ....... 1997 99,383 115,000 None None 25,000 None
Jack Eslick ........................ 1999 180,000 50,000 None None None 15,000
Senior Vice President ........... 1998 150,000 70,000 None None 66,564 15,000
Director of Asset Management .... 1997 111,800 72,000 None None 25,000 9,500
June H. McCutchen .................. 1999 150,000 62,120 None None None 15,000
Senior Vice President, Direct ... 1998 100,000 112,472 None None 44,804 15,000
of Design and Construction ...... 1997 70,000 94,723 None None 25,000 5,400
</TABLE>
- ----------
(1) There were no shares of restricted stock awarded in the 1999 fiscal year.
Holders of restricted stock are entitled to vote and receive dividends on
such shares from the date of grant. The amount reported in this table
represents the market value of the shares awarded on the date of grant,
determined by the closing price of the Common Stock on such date, without
giving effect to the diminution of value attributable to the restrictions
on such stock. As of December 31, 1999, the aggregate unvested restricted
stock holdings by the named executive officers consisted of 19,400 shares
as set forth below, with a then current aggregate market value, determined
in the same manner as of December 31, 1999, of $339,500, as follows: Mr.
Corcoran, 12,600 shares ($220,500 in value); Mr. Robinson, 6,300 shares
($110,250 in value); and Mr. Stadler, 500 shares ($8,750 in value).
(2) Represents an award of 15,000 shares of restricted stock on February 19,
1997 which become vested over a five-year period at the rate of 20% per
year. The value is based upon the closing price of the Common Stock on the
date of grant of $35.00 per share.
(3) Represents an award of 2,500 shares of restricted stock on February 19,
1997 which become vested over a five-year period at the rate of 20% per
year. The value is based upon the closing price of the Common Stock on the
date of grant of $35.00 per share.
(4) These amounts represent the Company's contributions to the Company's
employee savings and investment plan in the amount of up to $15,000 to each
executive officer. The executive officers receive health and disability
insurance benefits which do not exceed 10% of their respective salaries.
These benefits are also made available to other employees of the Company.
There were no grants of stock options or stock appreciation rights ("SARs")
to the Company's named executive officers during the 1999 fiscal year.
The unexpired stock options to purchase the Company's Common Stock held by named
executive officers of the Company at December 31, 1999 are summarized in the
table on the following page.
-13-
<PAGE> 18
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1999 December 31, 1999(1)
---------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas J. Corcoran, Jr 150,000 324,953 0 $ 0
Lawrence D. Robinson 0 137,262 0 0
William P. Stadler 0 64,256 0 0
Jack Eslick 0 66,564 0 0
June H. McCutchen 0 44,804 0 0
</TABLE>
- ---------------------------
(1) The option exercise price for all outstanding options exceeded the closing
sale price for the Common Stock on the New York Stock Exchange on December
31, 1999, which was $17.50 per share.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee works with senior management to develop and implement
FelCor's executive compensation philosophy. Generally, FelCor's philosophy on
executive compensation has been to provide a base cash compensation that is at
or below the average of other equity hotel REITs, and to provide additional
incentive compensation in the form of cash bonuses and grants of options and
restricted stock based on the realization of stated objectives, such as
acquisitions, financings, renovations, improvements in funds from operations and
other similar criteria expected to result in improvements in total stockholder
return.
Concerned with the lack of incentive provided by options previously granted,
none of which was "in the money" in late 1999, the Compensation Committee
engaged FPL Associates Consulting ("FPL") to assist it in the review and
development of FelCor's executive compensation program for officers and key
executives. FPL prepared a report which was presented to the Compensation
Committee in February 2000. FPL compared FelCor's compensation program with
those of a comparative peer group, consisting of other REITs, including hotel
REITs. Based on its analysis, FPL concluded that the salaries of the FelCor
management team were somewhat conservative versus industry practices, and that
the salaries of most executives were at or slightly below the median of the
market. In two cases, however, including the CEO position, the salaries were
significantly below median market practices. After including bonuses and
long-term incentive compensation, the total compensation for FelCor executives
was generally well below, and in the case of the CEO, substantially below,
current market practices.
FPL made certain recommendations, including the establishment of an annual
incentive opportunity structure, which would entitle executive officers to earn
a range of cash bonuses based upon the achievement of certain specified
objectives. FPL recommended that FelCor consider measures of performance based
upon (i) the overall corporate performance of FelCor, (ii) the performance of
each executive's business unit, and (iii) the individual or qualitative
performance of the executive. FPL also recommended a long-term incentive plan
for senior management which, given the current market conditions and the
characteristics of REIT stocks, is based upon grants of restricted stock rather
than options. FPL noted that, over the past 18 months, the use of restricted
stock by REITs for compensation purposes has grown dramatically.
The Compensation Committee has reviewed the report of FPL and, although it does
not accept all of the findings or recommendations of FPL, it intends to
implement certain of the recommendations in 2000. Included among
-14-
<PAGE> 19
the programs to be implemented by the Compensation Committee will be an annual
incentive bonus program and a long-term incentive plan that has as its
foundation the grant of restricted stock. The Compensation Committee recognizes,
however, that in order to implement such a long-term incentive plan based upon
the existing 1998 Restricted Stock and Stock Option Plan (the "1998 Plan"), the
existing 1998 Plan will have to be amended to permit the grant of additional
shares as Restricted Stock. Such an amendment has been approved by the Board of
Directors based upon the recommendation of the Compensation Committee and is
being submitted to the stockholders for their approval at the 2000 Annual
Meeting of Stockholders. See "Amendment of 1998 Plan." None of the programs
proposed to be implemented by the Compensation Committee will be retroactive to
1999.
Since REITs do not pay taxes at the corporate level, no policy has been
established with respect to qualifying compensation paid to executive officers
under Section 162(m) of the Internal Revenue Code.
Executive Compensation
During 1999, Mr. Corcoran, FelCor's President and Chief Executive Officer
received a base salary of $325,000 per year. This base cash compensation, like
that paid to other executive officers, is related primarily to competitive
factors and is not tied to FelCor's financial performance or the achievement of
specific goals. The base compensation of FelCor's executive officers was
increased in 1999 over 1998 levels to bring them more nearly in line with the
base compensation being paid by the competitive set. In evaluating these
increases the Committee also considered the overall performance of the executive
officers, in light of their objective and subjective contributions to FelCor's
success. This increase was in excess of the normal annual adjustment to reflect
changes in the Consumer Price Index.
In addition to base salary, cash bonuses were awarded to certain of FelCor's
executive officers during 1999, in lieu of the traditional award of stock
options. No performance bonuses were awarded during 1999. There was no generally
applicable policy or formula in effect for the determination of the amount of
such bonuses.
In April 2000, the Compensation Committee approved an annual incentive bonus
program for 2000 pursuant to which employees of FelCor, including the executive
officers, will be entitled to earn cash bonuses based upon the relative
performance of FelCor, in some cases, of a specific business unit of FelCor, and
of the individual employee, as measured against certain specified target
objectives. The amount of the bonus, which is set as a percentage of the
individual's base salary, will depend upon whether the measured performance
meets or exceeds the base criteria, the target criteria or the high performance
criteria established for each individual.
Other Incentive Compensation
No awards of restricted stock or stock options were made to any of the executive
officers during 1999. In April 2000, the Compensation Committee, subject to
stockholder approval, approved a long-term incentive plan that has as its
foundation the grant of restricted stock. Pursuant to this program, the
Compensation Committee, again subject to stockholder approval, authorized the
grant of an aggregate of 210,100 shares of Restricted Stock to employees,
including the executive officers, of FelCor (see "Amendment of 1998 Plan"
elsewhere in this Proxy Statement). These grants were made based upon the
performance of the officers and employees in 1999, and as incentive compensation
for 2000 and future years.
Employment Arrangements
FelCor has entered into an employment agreement with Mr. Corcoran that continues
in effect until December 31, 2000 and
-15-
<PAGE> 20
automatically renews for successive one-year terms, unless otherwise terminated.
Under this agreement, Mr. Corcoran serves as the President and Chief Executive
Officer of FelCor. The agreement provides that Mr. Corcoran be paid a salary of
not less than $120,000 per year and that a comprehensive medical plan be
maintained for the benefit of Mr. Corcoran and his dependents. None of the other
officers of FelCor has an employment agreement.
FelCor has entered into change in control and severance agreements with each of
its executive officers and certain other key employees. Each of these agreements
currently extend until December 31, 2000, and will automatically renew for
successive one- year terms, unless terminated. In the event of a potential
change in control, each covered employee agrees to remain in the employ of
FelCor until the earlier of one year following the "potential change in control"
or six months following an actual "change in control." "Change in control" is
defined to include (i) the acquisition of 35% or more of FelCor's voting stock
by any person or group, (ii) a change in a majority of the board of directors
not approved by existing directors, (iii) a merger in which existing
stockholders of FelCor would own less than 65% of the surviving corporation's
voting stock (but excluding transactions which are the functional equivalent of
an asset acquisition by FelCor and in which there is no change in its senior
management), and (iv) the adoption of a plan for the liquidation, sale or other
disposition (excluding leases in the ordinary course of business) of all or
substantially all of FelCor's assets. Following a "change in control," if a
covered employee's employment is terminated by FelCor other than for disability,
retirement, or "cause" (or by the employee for "good reason"), then the employee
will be entitled to (i) the immediate vesting of all stock options, awards of
restricted stock and other benefits previously awarded or credited to his
account and (ii) a lump sum severance payment of between 2.99 and 0.5 times the
employee's average total annual compensation over the past three years. FelCor
will be required to "gross-up" the severance payment to cover excise taxes on
the benefits, thereby providing such benefits to the employee on a net basis,
after payment of any such excise taxes.
FelCor also maintains a 401(k) Plan, health insurance and other benefits
generally available to all employees. FelCor also provides a deferred
compensation plan that is available only to directors and employees making in
excess of $100,000 per year. FelCor makes no matching or other contributions to
this plan, other than the payment of its operating and administrative expenses.
This report has been furnished by the current members of the Compensation
Committee.
---------------------------
Michael D. Rose Thomas A. McChristy
Richard S. Ellwood Robert H. Lutz, Jr.
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<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee were officers or employees of
FelCor or had any relationship with the Company requiring disclosure under
Securities and Exchange Commission regulations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FelCor and its subsidiaries leased all but three of the 188 hotels owned at
December 31, 1999 directly to, or to subsidiaries of, either DJONT Operations,
L.L.C. (85 hotels) or Bristol Hotels & Resorts (100 hotels) under Percentage
Leases. Hervey A. Feldman, who served as the Chairman of the Board of FelCor
until July 1998, and Thomas J. Corcoran, Jr., the President, Chief Executive
Officer and a director of FelCor, own all of the voting common equity interests
(50% of the common equity interest) in, and serve as officers and managers of,
DJONT. The remaining 50% non- voting common equity interest in DJONT is held by
entities owned by the children of Charles N. Mathewson, a director of FelCor.
Donald J. McNamara, the Chairman of the Board of FelCor, and certain individuals
and entities with which he is associated, have filed a Schedule 13D reflecting
shared voting and dispositive power with respect to 7,065,438 shares (39.9%) of
the common stock of Bristol Hotels & Resorts. Bass plc and certain of its
subsidiaries filed a Schedule 13D/A dated February 29, 2000, reflecting shared
voting and dispositive power with respect to 8,779,065 shares (49.6%) of the
common stock of Bristol Hotels & Resorts and have announced a definitive merger
agreement pursuant to which they expect to acquire the remaining shares of
Bristol during April 2000. Richard C. North, a director of FelCor, is the Group
Finance Director of Bass plc.
In connection with the efforts of Bass to acquire Bristol, as announced on
February 28, 2000, a Bass subsidiary (Bass America, Inc.) contributed 4,713,185
shares of outstanding FelCor Common Stock held by it to FelCor Lodging Limited
Partnership in exchange for a like number of Units of limited partner interest.
If these Units were to be redeemed for FelCor Common Stock, Bass and its
affiliates would own approximately 16.0% of FelCor's Common Stock. The exchange
by Bass of Common Stock for Units will not affect FelCor's FFO or earnings per
share, although it results in reducing FelCor's percentage ownership in the
FelCor Lodging Limited Partnership from approximately 95% to approximately 89%.
THE PERCENTAGE LEASES
The Percentage Leases generally have initial terms of five to 15 years and
provide for the payment by the lessees to the FelCor subsidiary which owns the
property a minimum base rent or, if greater, rent measured as a percentage of
room or suite revenue and certain other hotel revenues. The lessees are entitled
to all profits from the operation of the hotels leased by them, after the
payment of rent and the operating, management and certain other expenses of the
hotels. During 1999, DJONT paid approximately $256.1 million, and Bristol Hotels
& Resorts paid approximately $234.8 million, in lease rent to FelCor's
consolidated subsidiaries.
SHARING OF OFFICES AND EMPLOYEES
FelCor shares its executive offices and certain employees with DJONT and another
entity controlled by Messrs. Feldman and Corcoran, and each company bears its
share of the costs thereof, including an allocated portion of the rent, salaries
of certain personnel (other than Mr. Corcoran), office supplies, telephones and
depreciation of office furniture, fixtures and equipment. Any such allocation of
shared expenses to FelCor must be approved by a majority of the Independent
Directors of FelCor. During 1999, FelCor paid approximately $5.7 million (or
89.5% of all allocable expenses) under this arrangement. Mr. Corcoran's salary
is paid solely by FelCor and he receives no salary from either of the other
entities. Mr. Corcoran is the President, Chief Executive Officer and a director
of FelCor and also serves as a director (or manager) and the President of each
of such other entities. For a description of Mr. Corcoran's employment agreement
and of
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<PAGE> 22
the change in control and severance agreements between FelCor and its executive
officers and certain other key employees, please see the discussion under
"Employment Arrangements" in the Compensation Committee Report on Executive
Compensation, beginning on page 16.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires officers and directors, and persons
who beneficially own more than ten percent (10%) of the Company's stock, to file
initial reports of ownership and reports of changes in ownership with the SEC.
Officers, directors and greater than ten percent (10%) beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies furnished to the Company and
representations from the officers and directors, the Company believes that all
Section 16(a) filing requirements for the year ended December 31, 1999
applicable to its officers, directors and greater than ten percent (10%)
beneficial owners were satisfied, except that Robert H. Lutz, Jr. filed one late
Form 4 report reflecting a single purchase of Common Stock.
Based on representations from the officers and directors, the Company believes
that no other Forms 5 for directors, officers and greater than ten percent (10%)
beneficial owners were required to be filed with the SEC for the period ended
December 31, 1999.
---------------------------------------
STOCK PERFORMANCE GRAPH
Annual total returns to FelCor stockholders are shown in the performance graph
appearing on the following page. The graph shows the relative investment
performance of FelCor Common Stock, the S&P 500, and the NAREIT Equity Index
from December 31, 1994 through December 31, 1999.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FelCor Lodging Trust Incorporated 100.0 154.6 209.8 222.6 155.0 133.4
NAREIT Equity Index 100.0 115.3 155.9 187.5 154.7 147.5
S&P 500 Total Return 100.0 137.4 169.0 225.4 289.8 350.7
</TABLE>
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<PAGE> 23
ADDITIONAL INFORMATION
Other Business
FelCor's Board does not intend to bring, and knows of no one intending to bring,
any matter before the annual meeting other than the election of the director
nominees. If any other matter is properly brought before the meeting, the
persons named as proxies will vote them in accordance with the direction of the
FelCor Board.
Outstanding Shares
On March 28, 2000, a total of 55,752,852 shares of FelCor Common Stock was
outstanding. Each share of Common Stock is entitled to one vote.
Annual Report
FelCor's 1999 Annual Report to Stockholders is enclosed with this Proxy
Statement. WE WILL ALSO SEND YOU A COPY OF FELCOR'S ANNUAL REPORT ON FORM 10-K
FOR 1999, WITHOUT CHARGE, IF REQUESTED IN WRITING SENT TO THE CORPORATE
SECRETARY AT THE ADDRESS LISTED UNDER QUESTIONS BELOW.
How We Solicit Proxies
In addition to this mailing, FelCor employees may solicit proxies personally,
electronically, or by telephone. FelCor pays the costs of soliciting the
proxies. We are paying Corporate Investor Communications, Inc. to help with the
solicitation. We do not expect their fees to exceed $5,000. We also reimburse
brokers and other nominees for their expenses in sending these materials to you
and getting your voting instructions.
Stockholder Proposals for Next Year
The deadline for Stockholder proposals eligible for inclusion in next year's
proxy statement is December 11, 2000. All proposals should be submitted in
writing to the Secretary of FelCor at the address listed under Questions below.
Independent Public Accountants
The firm of PricewaterhouseCoopers, LLP has served as auditors for FelCor during
1999 and will serve in that capacity for 2000, unless the Board subsequently
determines that a change is desirable. A representative of the auditors is
expected to be at FelCor's 2000 Annual Meeting of Stockholders to respond to
appropriate questions and to make a statement if desired.
Questions
If you have questions or need more information about the annual meeting, you may
write to:
Corporate Secretary
FelCor Lodging Trust Incorporated
545 E. John Carpenter Frwy., Suite 1300
Irving, Texas 75062
or call us at (972) 444-4900 and ask for
stockholder communications.
For we also invite you to visit FelCor's Internet site at www.felcor.com.
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<PAGE> 24
[GRAPHIC OMITTED]
FELCOR LODGING TRUST INCORPORATED
545 E. JOHN CARPENTER FRWY., SUITE 1300
IRVING, TEXAS 75062
<PAGE> 25
1998 Restricted Stock and Stock Options Plan, as amended.
Filed supplementally as an appendix to the Proxy Statement;
Not included as part of the Proxy Statement
<PAGE> 26
FELCOR LODGING TRUST INCORPORATED
FIRST AMENDMENT TO 1998 RESTRICTED STOCK AND STOCK OPTION PLAN
<PAGE> 27
FELCOR LODGING TRUST INCORPORATED
FIRST AMENDMENT TO 1998 RESTRICTED STOCK AND STOCK OPTION PLAN
THIS FIRST AMENDMENT TO 1998 RESTRICTED STOCK AND STOCK OPTION PLAN
(the "Amendment") is executed and delivered this 24th day of February, 2000 by
FelCor Lodging Trust Incorporated, a Maryland corporation (the "Company").
R E C I T A L S:
A. The Company previously has adopted the 1998 Restricted Stock and
Stock Option Plan (the "Plan") which has been approved and adopted by the
shareholders of the Company.
B. The Board of Directors of the Company has adopted this Amendment to
the Plan for the purpose of providing the Company with additional flexibility to
implement the purposes of the Plan by removing the limitation on the number of
shares of Stock under the Plan that may be issued as Restricted Stock.
C. The Board of Directors of the Company has recommended that this
Amendment be submitted to the shareholders of the Company for their approval and
adoption.
A G R E E M E N T S:
NOW, THEREFORE, the Plan is hereby amended as follows:
1 Technical Amendment. All references in the Plan to "FelCor Suite
Hotels, Inc." are hereby amended to refer to "FelCor Lodging Trust
Incorporated."
2. Removal of Limitation on Restricted Stock. Section 5.1 of the Plan
is hereby amended by deleting the second sentence thereof in its entirety.
3. Effective Date. The Amendment shall be effective as of the date
hereof, the date of its adoption by the Board of Directors of the Company
("Effective Date"), although it is subject to shareholder approval as provided
in Section 4.
4. Shareholder Approval. All Awards granted under the Plan as amended
by this Amendment are subject to, and may not be exercised before, and will be
rescinded and become void in the absence of, the approval of this Amendment by a
majority of the shareholders voting thereon at a meeting of shareholders, at
which a quorum is present, held prior to the first anniversary date of the
Effective Date.
5. Defined Terms: Effect Upon Plan. All initially capitalized terms
used without definition herein shall have the meanings set forth therefor in the
Plan. Except as expressly amended hereby, the Plan shall remain in full force
and effect.
<PAGE> 28
IN WITNESS WHEREOF, this First Amendment to 1998 Restricted Stock and
Stock Option Plan is executed and delivered as of the date first above written.
FELCOR LODGING TRUST INCORPORATED
By: /s/ LAWRENCE D. ROBINSON
-----------------------------------------
Name: Lawrence D. Robinson
---------------------------------------
Title: Senior Vice President
--------------------------------------
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<PAGE> 29
FELCOR SUITE HOTELS, INC.
1998 RESTRICTED STOCK AND STOCK OPTION PLAN
<PAGE> 30
FELCOR SUITE HOTELS, INC.
1998 RESTRICTED STOCK AND STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. Establishment, Purpose, and Effective Date of
Plan................................................ 1
1.1 Establishment....................................... 1
1.2 Purpose............................................. 1
1.3 Effective Date...................................... 1
SECTION 2. Definitions..................................... 1
2.1 Definitions......................................... 1
2.2 Gender and Number................................... 2
SECTION 3. Eligibility and Participation................... 2
3.1 Eligibility and Participation....................... 2
SECTION 4. Administration.................................. 2
4.1 Administration...................................... 2
SECTION 5. Stock Subject to Plan........................... 2
5.1 Number.............................................. 2
5.2 Lapsed Awards....................................... 2
5.3 Adjustment in Capitalization........................ 2
SECTION 6. Shareholder Approval and Duration of Plan....... 3
6.1 Shareholder Approval................................ 3
6.2 Duration of Plan.................................... 3
SECTION 7. Stock Options................................... 3
7.1 Grant of Options.................................... 3
7.2 Option Agreement.................................... 3
7.3 Option Price........................................ 3
7.4 Duration of Options................................. 3
7.5 Exercise of Options................................. 3
7.6 Payment............................................. 4
7.7 Restrictions on Stock Transferability............... 4
7.8 Termination of Employment Due to Death or
Disability.......................................... 4
7.9 Termination of Employment Other than for Death or
Disability.......................................... 4
7.10 Nontransferability of Options....................... 4
SECTION 8. Restricted Stock................................ 4
8.1 Grant of Restricted Stock........................... 4
8.2 Transferability..................................... 4
8.3 Other Restrictions.................................. 4
8.4 Voting Rights....................................... 4
8.5 Dividends and Other Distributions................... 4
8.6 Termination of Employment........................... 4
SECTION 9. Rights of Employees............................. 5
9.1 Employment.......................................... 5
9.2 Participation....................................... 5
SECTION 10. Amendment, Modification, and Termination of
Plan................................................ 5
10.1 Amendment, Modification, and Termination of Plan.... 5
SECTION 11. Miscellaneous Provisions....................... 5
11.1 Tax Withholding..................................... 5
11.2 Stock Withholding Elections......................... 5
</TABLE>
i
<PAGE> 31
<TABLE>
<S> <C>
SECTION 12. Indemnification................................ 5
12.1 Indemnification..................................... 5
SECTION 13. Requirements of Law............................ 6
13.1 Requirements of Law................................. 6
13.2 Governing Law....................................... 6
</TABLE>
ii
<PAGE> 32
FELCOR SUITE HOTELS, INC.
1998 RESTRICTED STOCK AND STOCK OPTION PLAN
SECTION 1. Establishment, Purpose, and
Effective Date of Plan
1.1 Establishment. FelCor Suite Hotels, Inc., a Maryland corporation,
hereby establishes the "FELCOR SUITE HOTELS, INC. 1998 RESTRICTED STOCK AND
STOCK OPTION PLAN" (THE "PLAN") for Independent Directors, executive officers
and key employees. The Plan permits the grant of stock options and restricted
stock as a payout media for payments under the plan.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by Independent Directors, executive officers and
key employees, by providing additional incentives and motivation toward superior
performance of the Company, and by enabling the Company to attract and retain
the services of Independent Directors, executive officers and key employees upon
whose judgment, interest, and special effort the successful conduct of its
operations is largely dependent.
1.3 Effective Date. The Plan shall become effective immediately upon its
adoption by the Board of Directors of the Company ("Effective Date"), although
it is subject to shareholder approval as provided in Section 6.1.
SECTION 2. Definitions
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Award" means any Stock Option or Restricted Stock granted under
this Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee of the Board;
provided, however, that for any grant to an Independent Director, the
remaining members of the Board shall serve as the Compensation Committee
with respect to such grant, including, but not limited to, the approval of
the grant. The Board, as a whole, may take any action which the Committee
is authorized to take hereunder.
(e) "Company" means FelCor Suite Hotels, Inc., a Maryland corporation.
(f) "Disability" means an individual who is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted, or can be expected to last, for a continuous period of
not less than twelve (12) months.
(g) "Employee" means an employee (including officers and directors who
are also employees) of the Company or its subsidiaries, affiliates
(including partnerships) or any branch or division thereof.
(h) "Fair Market Value" of a share of Stock means the reported closing
sales price of the Stock on the New York Stock Exchange Composite Tape on
that date, or if no closing price is reported on that date, on the last
preceding date on which such closing price of the Stock was so reported. If
the Stock is not traded on the New York Stock Exchange at the time a
determination of its Fair Market Value is required to be made hereunder,
its Fair Market Value shall be deemed to be equal to the average between
the closing bid and asked prices of the Stock on the most recent date on
which the Stock was publicly traded. In the event the Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its Fair Market Value shall be made by the
Committee in such manner as it deems appropriate.
<PAGE> 33
(i) "Independent Director" means a director of the Company who is not
an officer or employee of the Company, any affiliate of an officer or
employee or any affiliate of (i) any advisor to the Company under an
advisory agreement, (ii) any lessee of any property of the Company, (iii)
any subsidiary of the Company or (iv) any partnership which is an affiliate
of the Company.
(j) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be either
(i) an "incentive stock option" within the meaning of Section 422 of the
Code or (ii) a "nonstatutory stock option."
(k) "Participant" means any Employee or Independent Director
designated by the Committee to participate in the Plan.
(l) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock is restricted pursuant to Section 8 of the
Plan.
(m) "Restricted Stock" means Stock granted to a Participant pursuant
to Section 8 of the Plan.
(n) "Stock" means the common stock of the Company, par value of $.01.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 3. Eligibility and Participation
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among the independent Directors and Employees
who, in the opinion of the Committee, are in a position to contribute materially
to the Company's continued growth and development and to its long-term financial
success.
SECTION 4. Administration
4.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the administration of
the Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.
SECTION 5. Stock Subject to Plan
5.1 Number. The total number of shares of Stock subject to Awards under
the Plan may not exceed 1,000,000, subject to adjustment upon the occurrence of
any of the events indicated in Section 5.3 hereof. Of this total number, not
more than 50,000 shares of Stock may be issued as Restricted Stock. The shares
to be delivered under the Plan may consist, in whole or in part, of authorized
but unissued Stock or treasury Stock, not reserved for any other purpose.
Notwithstanding any other provision hereof to the contrary, no Participant shall
be eligible to receive Awards pursuant to this Plan in excess of 250,000 shares
of Common Stock in any fiscal year (the "Section 162(m) Maximum").
5.2 Lapsed Awards. If any Award granted under the Plan terminates, expires
or lapses for any reason, any shares subject to such Award again shall be
available for the grant of an Award hereunder.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs after the Effective Date by reason of a
Stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change, the aggregate number of
shares of Stock
2
<PAGE> 34
subject to the Plan and to each Award hereunder, and to the stated Option price
of each Award, shall be adjusted appropriately by the Committee or the Board,
whose determination shall be conclusive; provided, however, that fractional
shares shall be rounded to the nearest whole share. In such event, the Committee
or the Board also shall have discretion to make appropriate adjustments in the
number and type of shares subject to an Award of Restricted Stock under the Plan
pursuant to the terms of such an Award.
SECTION 6. Shareholder Approval and Duration of Plan
6.1 Shareholder Approval. All Awards granted under this Plan are subject
to, and may not be exercised before, and will be rescinded and become void in
the absence of, the approval of this Plan by a majority of the shareholders
voting thereon at a meeting of shareholders, at which a quorum is present, held
prior to the first anniversary date of the board meeting held to approve this
Plan.
6.2 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate pursuant to Section 10 hereof, until all
Stock subject to it shall have been purchased or acquired pursuant to the
provisions hereof. Notwithstanding the foregoing, no Option may be granted under
the Plan on or after November 1, 2007.
SECTION 7. Stock Options
7.1 Grant of Options. Subject to the provisions of Section 5 and 6,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant. The
Committee may grant any type of Option to purchase Stock that is permitted by
law at the time of grant; provided however, that the aggregate Fair Market Value
(determined at the time the Option is granted) of the Stock, with respect to
which all incentive stock options granted under any plan of the Company are
exercisable for the first time by a Participant during any calendar year, may
not exceed $100,000. Nothing in this Section 7 of the Plan shall be deemed to
prevent the grant of nonstatutory stock options in amounts that exceed the
maximum established by Section 422 of the Code.
7.2 Option Agreement. Each Option shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of shares of Stock to which the Option
pertains, and such other provisions as the Committee shall determine.
7.3 Option Price. The Option price of each share of Stock subject to each
Option granted pursuant to this Plan shall be determined by the Committee at the
time the Option is granted and, in the case of incentive stock options, shall
not be less then 100% of the Fair Market Value of a share of Stock on the date
the Option is granted, as determined by the Committee. In the case of incentive
stock options granted to any person who owns, directly or indirectly, Stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of Stock ("Ten Percent Owner"), the Option price shall not be less than
110% of the Fair Market Value of a share of Stock on the date the Option is
granted. The Option price of each share of Stock subject to a nonstatutory stock
option under this Plan shall be determined by the Committee, in its sole
discretion, prior to granting the Option.
7.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however, that no
incentive stock option shall be exercisable later than ten (10) years from the
date of its grant, and no incentive stock option granted to a Ten Percent Owner
shall be exercisable later than five (5) years from the date of its grant.
7.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for all
Participants. No Option may be exercised within six (6) months after the date of
grant. Each Option that is intended to qualify as an incentive stock option
pursuant to Section 422 of the Code shall comply with the applicable provisions
of the Code pertaining to such Options.
3
<PAGE> 35
7.6 Payment. The Option price of Stock acquired upon exercise of any
Option shall be paid in full on the date of exercise, by certified or cashier's
check, by wire transfer, by money order, with Stock (but with Stock only if
expressly permitted by the terms of the Option), or by a combination of the
above. If the Option price is permitted to be, and is, paid in whole or in part
with Stock, the value of the Stock surrendered shall be its Fair Market Value on
the date surrendered. The proceeds from payment of Option prices shall be added
to the general funds of the Company and shall be used for general corporate
purposes.
7.7 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed, and under
any blue sky or state securities laws applicable to such shares.
7.8 Termination of Employment Due to Death or Disability. Unless otherwise
expressly provided in the Option, if the employment of a Participant is
terminated by reason of death or Disability, the rights under any then
outstanding Option shall terminate upon the first to occur of (i) the expiration
date of the Option or (ii) the first anniversary of such date of termination of
employment.
7.9 Termination of Employment Other than for Death or Disability. Unless
otherwise expressly provided in the Option, if the employment of the Participant
shall terminate for any reason other than death or Disability, the rights under
any then outstanding Option shall terminate upon the first to occur of (i) the
expiration date of the Option or (ii) ninety (90) days after such date of
termination of employment.
7.10 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
SECTION 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and
6, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be evidenced by a
Restricted Stock agreement.
8.2 Transferability. Except as provided in Sections 8.6 and 8.7 hereof,
the shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated for such period of
time as shall be determined by the Committee and shall be specified in the
Restricted Stock agreement, or upon earlier satisfaction of other conditions as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock agreement.
8.3 Other Restrictions. The Committee may impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
8.4 Voting Rights. Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those shares during
the Period of Restriction.
8.5 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all cash dividends distributed with respect to those shares
while they are so held.
8.6 Termination of Employment. Except as provided by the Committee at the
time of grant, in the event that a Participant terminates his employment with
the Company for any reason during the Period of Restriction (including death),
then any shares of Restricted Stock still subject to restrictions at the date of
such termination automatically shall be forfeited and shall again be available
for issuance under the Plan.
4
<PAGE> 36
SECTION 9. Rights of Employees
9.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
9.2 Participation. No Committee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
SECTION 10. Amendment, Modification,
and Termination of Plan
10.1 Amendment, Modification, and Termination of Plan. The Board at any
time may terminate, and from time to time may amend or modify the Plan, and may
amend or modify Awards hereunder; provided, however, that no amendment of the
Plan or of any Award hereunder, without approval of the shareholders within one
year after the adoption of such amendment, may:
(a) increase the aggregate number of shares of Stock that may be
issued under the Plan;
(b) extend the term of the Plan;
(c) effect a repricing of previously granted Options, whether directly
or indirectly through the cancellation of outstanding Options and the
concurrent reissuance of Options for a like number of shares but at a
lesser exercise price;
(d) extend the period during which Awards may be granted; or
(e) materially modify the requirements as to eligibility to receive
Awards under the Plan.
No amendment, modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
consent of the Participant.
SECTION 11. Miscellaneous Provisions
11.1 Tax Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local withholding tax requirements on any Award under the
Plan.
11.2 Stock Withholding Elections. Subject to the consent of the Committee,
due to the (i) exercise of a nonstatutory stock option or (ii) lapse of
restrictions on a Restricted Stock Award, a Participant may make an irrevocable
election to (a) have shares of Stock otherwise issuable thereunder withheld or
(b) tender to the Company shares of Stock then held by the Participant (whether
received pursuant to (i) or (ii) or in any other transaction) having an
aggregate Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state and local tax obligations
associated with the transaction. Such elections must be made by a Participant on
or prior to the tax date.
SECTION 12. Indemnification
12.1 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
made in good faith and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not apply to any acts of willful
misconduct by any member of the
5
<PAGE> 37
Committee or the Board. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Charter or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
SECTION 13. Requirements of Law
13.1 Requirements of Law. The granting of Awards and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
13.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Maryland.
FELCOR SUITE HOTELS, INC.
By: /s/ LAWRENCE D. ROBINSON
------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President and
General Counsel
ATTEST:
/s/ LESTER C. JOHNSON
- ------------------------------------
Lester C. Johnson, Vice President
6
<PAGE> 38
PROXY
FELCOR LODGING TRUST INCORPORATED
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2000
The undersigned hereby appoints Thomas J. Corcoran, Jr. and Lawrence D.
Robinson, or either of them, with full power of substitution in each, proxies
(and if the undersigned is a proxy, substitute proxies) to vote all Common Stock
of the undersigned in FelCor Lodging Trust Incorporated at the Annual Meeting of
Stockholders to be held at the Embassy Suites (Market Center) hotel, 2727
Stemmons Freeway, Dallas, Texas, at 9:00 a.m., Central Time, on May 24, 2000 and
at any adjournments thereof, as specified below:
1. ELECTION OF CLASS III DIRECTORS
[ ] FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
Nominees: Richard S. Ellwood
Richard O. Jacobson
Charles N. Mathewson
To vote FOR or WITHHOLD AUTHORITY with respect to all nominees, check
the appropriate box above. To WITHHOLD AUTHORITY with respect to any individual
nominee, check the FOR box and write the name of such nominee in the space
below.
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PLEASE SIGN AND DATE ON REVERSE SIDE OF THIS PROXY
- --------------------------------------------------------------------------------
<PAGE> 39
[REVERSE SIDE OF PROXY]
2. AMENDMENT OF 1998 RESTRICTED STOCK AND STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proxies (and if the undersigned is a proxy, any substitute proxies)
are authorized to vote upon any other matter that is properly brought
before the meeting in the manner directed by FelCor's Board of
Directors.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
proxy will be voted FOR the election of the nominees for Class III director and
FOR the amendment of the 1998 Plan.
Dated: __________________________________, 2000
Please sign exactly as name appears at left. When
shares are held by joint tenants, both should sign.
When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
----------------------------------------------------
Signature
----------------------------------------------------
Title
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
