<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
JOHN Q. HAMMONS HOTELS, INC.
----------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
5) Total fee paid:
__________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________
2) Form, Schedule or Registration Statement No.:
________________________
3) Filing Party:
________________________
4) Date Filed:
________________________
<PAGE>
JOHN Q. HAMMONS HOTELS, INC.
300 John Q. Hammons Parkway
Springfield, Missouri 65806
(417) 864-4300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2000
To the Shareholders of
John Q. Hammons Hotels, Inc.
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of John Q. Hammons Hotels, Inc. (the "Company") will be held on
Tuesday, May 2, 2000, at 9:00 a.m., local time, at University Plaza Convention
Center, 730 E. St. Louis Street, Springfield, Missouri for the following
purposes:
1. Election of Directors. To elect three directors, each for a three-
---------------------
year term (Proposal One);
2. Ratification of Appointment of Auditors. To ratify the appointment by
---------------------------------------
the Board of Directors of the firm of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 29, 2000 (Proposal
Two); and
3. Other Business. To transact such other business as may properly come
--------------
before the meeting or any adjournments thereof.
The Board of Directors of the Company has fixed the close of business on
March 23, 2000 as the record date for the determination of shareholders entitled
to notice of and to vote at the Annual Meeting. Only shareholders of record at
the close of business on that date will be entitled to notice of and to vote at
the Annual Meeting or any adjournments or postponements thereof.
Sincerely,
John Q. Hammons
Chairman of the Board
Springfield, Missouri
March 31, 2000
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
JOHN Q. HAMMONS HOTELS, INC.
300 John Q. Hammons Parkway
Springfield, Missouri 65806
(417) 864-4300
PROXY STATEMENT
for
ANNUAL MEETING OF JOHN Q. HAMMONS HOTELS, INC. SHAREHOLDERS
TO BE HELD ON MAY 2, 2000
INTRODUCTION
As used herein, the term "Company" means (i) John Q. Hammons Hotels, Inc.,
a Delaware corporation, (ii) John Q. Hammons Hotels, L.P., a Delaware limited
partnership of which John Q. Hammons Hotels, Inc. is the sole general partner,
and (iii) Hammons, Inc., a Missouri corporation, as predecessor general partner,
collectively, or, as the context may require, John Q. Hammons Hotels, Inc. only.
As used herein, the term "Partnership" means John Q. Hammons Hotels, L.P., a
Delaware limited partnership.
General
We are sending this Proxy Statement to the shareholders of the Company as
part of the solicitation of proxies by the board of directors from holders of
the outstanding shares of the Company's class A common stock, par value $.01 per
share, and class B common stock, par value $.01 per share, for use at the Annual
Meeting of Shareholders of the Company to be held at University Plaza Convention
Center, 730 E. St. Louis Street, Springfield, Missouri at 9:00 a.m. local time
on May 2, 2000 and at any adjournments or postponements thereof. At the Annual
Meeting, you will be asked to elect three (3) members of the Board of Directors
(Proposal One), to ratify the appointment by the Board of Directors of the firm
of Arthur Andersen LLP as independent auditors of the Company for the fiscal
year ending December 29, 2000 (Proposal Two) and to transact such other business
as may properly come before the meeting or any adjournments thereof. This Proxy
Statement, together with the enclosed proxy card, is first being mailed to
shareholders on or about March 31, 2000.
Solicitation, Voting and Revocability of Proxies
The Board of Directors has fixed the close of business on March 23, 2000 as
the record date for the determination of the Company's shareholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only holders of
record of shares of Common Stock at the close of business on such date will be
entitled to vote at the Annual Meeting, with each share of Class A Common Stock
entitling its owner to one vote and each share of Class B Common Stock entitling
its owner to 50 votes on all matters properly presented at the Annual Meeting.
On the record date, there were approximately 302 holders of record of the
5,187,620 shares of Class A Common Stock then outstanding. Based on the number
of annual reports requested by brokers, the Company estimates that it has
approximately 1,711 beneficial owners of its Class A Common Stock. There was one
holder of record of the 294,100 shares of Class B Common Stock then outstanding.
The presence, in person or by proxy, of holders of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting for the
election of directors and other matters. Shareholders' votes will be tabulated
by the persons appointed by the Board of Directors to act as inspectors of
election for the Annual Meeting. Abstentions and broker non-votes will be
treated as shares that are present, in person or by proxy, and entitled to vote
for purposes of determining a quorum at the Annual Meeting, but will not be
counted as votes cast on or against any matter presented at the Annual Meeting.
<PAGE>
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted FOR the election of the three (3)
nominees for election to the Board of Directors and FOR the ratification of the
appointment of Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 29, 2000. The Board of Directors does not know of
any matters other than those described in the Notice of Annual Meeting that are
to come before the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote the shares
represented by such proxy upon such matters as determined by a majority of the
Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with, or
by delivering a duly executed proxy bearing a later date, to Debra Mallonee
Shantz, General Counsel, John Q. Hammons Hotels, Inc., 300 John Q. Hammons
Parkway, Suite 900, Springfield, Missouri 65806, or by appearing at the Annual
Meeting and voting in person.
The cost of soliciting proxies will be borne by the Company. In addition
to use of the mails, proxies may be solicited personally or by telephone or
telegraph by directors, officers and employees of the Company. The Company also
will request persons, firms and companies holding shares in their names or in
the name of their nominees, which are beneficially owned by others, to send
proxy materials to and obtain proxies from such beneficial owners. The Company
will reimburse such persons for their reasonable expenses incurred in that
connection.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1999 accompanies this Proxy Statement. The Company is required to
file an Annual Report for its fiscal year ended December 31, 1999 on Form 10-K
with the Securities and Exchange Commission (the "SEC"). You may obtain, free
of charge, a copy of the Form 10-K (without exhibits) by writing to Investor
Relations, John Q. Hammons Hotels, Inc., 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806.
A list of shareholders of record entitled to vote at the Annual Meeting
will be available for inspection by any shareholder for any purpose germane to
the meeting during ordinary business hours for a period of 10 days prior to the
meeting at the Company's office at 300 John Q. Hammons Parkway, Springfield,
Missouri 65806.
ELECTION OF DIRECTORS
(Proposal One)
At the Annual Meeting, three directors will be elected, each for a three-
year term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. The Board of Directors believes that the nominees will stand for
election and will serve if elected as directors. However, if any of the persons
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other person
as the Board of Directors may recommend.
Under the Company's Bylaws, the Board of Directors currently is comprised
of nine persons divided into three classes. The term of office of only one
class of directors expires in each year, and their successors are elected for
terms of three years and until their successors are elected and qualified.
There is no cumulative voting for election of directors. The three nominees
receiving the greatest number of votes cast for the election of directors at the
Annual Meeting will become directors at the conclusion of the tabulation of
votes.
Information as to Nominees and Continuing Directors
The following table sets forth the names of the Board of Directors'
nominees for election as a director and those directors who will continue to
serve after the Annual Meeting. Also set forth is certain other information
with respect to each person's age, principal occupation or employment during the
past five years, the periods during which they have served as a director of the
Company and positions currently held with the Company.
2
<PAGE>
<TABLE>
<CAPTION>
Director Expiration
Age Since of Term Position(s) Held with Company
-------- ------------- ----------------- -----------------------------
<S> <C> <C> <C> <C>
Nominees for 3-year term
Daniel L. Earley 57 1994 2003 Director
John Q. Hammons 81 1989 2003 Director, Chairman and Chief Executive
Officer
James F. Moore 57 1995 2003 Director
Continuing Directors
John E. Lopez-Ona 42 1996 2001 Director
Kenneth J. Weber 54 1998 2001 Director, Executive Vice President and
Chief Financial Officer
Donald H. Dempsey 55 1999 2001 Director
Jacqueline A. Dowdy 56 1989 2002 Director and Secretary
William J. Hart 59 1993 2002 Director
David C. Sullivan 60 1999 2002 Director
</TABLE>
Donald H. Dempsey became a director of the Company in August 1999. Mr.
Dempsey currently serves as Executive Vice President and Chief Financial Officer
of Equity Inns, Inc., where he also serves on its board of directors. Equity
Inns, Inc. is a large lodging real estate investment trust headquartered in
Germantown, Tennessee, which owns 100 hotels in 36 states. Mr. Dempsey has more
than 30 years experience in corporate and financial management within the hotel
industry. Prior to joining Equity Inns in July 1998, Mr. Dempsey served as
Executive Vice President and Chief Financial Officer of Choice Hotel
Corporation, a publicly traded hotel franchiser, manager and owner of hotels
whose brands include Hampton Inn, Homewood Suites and Embassy Suites. Mr.
Dempsey was named Senior Vice President and Chief Financial Officer in 1995 of
The Promus Companies Incorporated ("PCI"); from 1993 to 1995, he served as
Senior Vice President of Finance and Administration of the Hotel Division. From
1983 to 1993, he was Vice President of Franchising and Development for the
Hampton Inn Division of PCI. Mr. Dempsey also held various corporate and
financial management and administrative positions with Holiday Inns from 1969 to
1983.
Jacqueline A. Dowdy has been the Secretary and director of the Company
since 1989. She has been active in Mr. Hammons' hotel operations since 1981.
She is an officer and director of several affiliates of the Company.
Daniel L. Earley has been a director of the Company since February 1994.
Since 1985, Mr. Earley has been President, Chief Executive Officer and a
director of Clermont Savings Bank, FSB, a community bank located in Milford,
Ohio, which is owned by Mr. Hammons.
John Q. Hammons is the Chairman, Chief Executive Officer, a director and
the founder of the Company. Mr. Hammons has been actively engaged in the
acquisition, development and management of hotel properties since 1959. From
1959 through 1969, Mr. Hammons and a business partner developed 34 Holiday Inn
franchises, 23 of which were sold in 1969 to Holiday Inns, Inc. Since 1969, Mr.
Hammons has developed 85 hotels on a nationwide basis, primarily under the
Holiday Inn and Embassy Suites tradenames. Mr. Hammons is the controlling
shareholder of the Company. See "Security Ownership of Management."
William J. Hart has been a director of the Company since December 1993. He
is a member of the law firm of Husch & Eppenberger, LLC, formerly Farrington &
Curtis, P.C., a position he has held since 1970. Mr. Hart's firm performs legal
services on a regular basis for the Company and personally for Mr. Hammons. Mr.
Hart has also been a director since 1981 of Johnson Industries, Inc., a
commercial textiles company listed on the New York Stock Exchange.
3
<PAGE>
John E. Lopez-Ona became a director of the Company in May 1996. He was a
managing director of Kidder Peabody & Company, Inc., an investment banking firm,
from March 1990 through March 1995. Since June 1995, Mr. Lopez-Ona has been the
President of Anvil Capital, Inc., a firm owned by him which specializes in
principal investment.
James F. Moore became a director of the Company in May 1995. Since 1987,
Mr. Moore has been Chairman, Chief Executive Officer and a director of Champion
Products, Incorporated, a privately owned manufacturing company serving the
telecommunications industry located in Strafford, Missouri. Prior to 1987, Mr.
Moore had served as President of the Manufacturing Division of Service
Corporation International, a company listed on the New York Stock Exchange.
David C. Sullivan became a director of the Company in May 1999. Mr.
Sullivan has been Chairman, Chief Executive Officer and a director of
ResortQuest International, a company listed on the New York Stock Exchange that
provides vacation rental and property management services, since May 1998. From
April 1995 to December 1997, Mr. Sullivan was Executive Vice President and Chief
Operating Officer of Promus Hotel Corporation, a publicly traded hotel
franchiser, manager and owner of hotels whose brands include Hampton Inn,
Homewood Suites and Embassy Suites. From 1993 to 1995, Mr. Sullivan was the
Executive Vice President and Chief Operation Officer of the Hotel Division of
The Promus Companies Incorporated ("PCI"). He was the Senior Vice President of
Development and Operations of the Hampton Inn/Homewood Suites Division of PCI
from 1991 to 1993. From 1990 to 1991, Mr. Sullivan was the Vice President of
Development of the Hampton Inn Hotel Division of PCI.
Kenneth J. Weber has been the Chief Financial Officer of the Company, since
April 1998 and became a director of the Company in May 1998. Prior to joining
the Company, Mr. Weber was the Executive Vice President and Chief Financial
Officer of Chartwell Leisure, a New York based hotel company. From 1992 to
1996, Mr. Weber was the Senior Vice President and Chief Financial Officer of
Omni Hotels, based in Hampton, New Hampshire. From 1986 to 1992, Mr. Weber
worked with Red Lion Hotels, based in Vancouver, Washington, holding the
positions of Senior Vice President, Chief Accounting Officer and Corporate
Controller. Mr. Weber began his career in the hotel industry with the Marriott
Corporation, holding positions in several of Marriott's divisions, including
President and Chief Executive Officer of Farrell's Ice Cream Parlour Restaurants
from 1983 to 1986.
The Board of Directors unanimously recommends that shareholders vote FOR
the election of its nominees as directors.
Corporate Governance and Other Matters
Selection of Nominees and Nominations by Shareholders. The Board of
Directors of the Company acts as a nominating committee for selecting nominees
for election as directors. The Company's Bylaws also permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors if such
nominations are made pursuant to timely notice in writing to the Secretary of
the Company. To be timely such notice must be delivered to, or mailed to and
received at, the principal executive offices of the Company not less than 120
days nor more than 180 days prior to the date of the meeting, provided that at
least 130 days' notice or prior public disclosure of the date of the Annual
Meeting is given or made to shareholders. If less than 130 days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder must be received by the Company not
later than the close of business on the 10th day following the day on which such
notice of the date of the Annual Meeting was mailed or such public disclosure
was made. A shareholder's notice of nomination must also set forth certain
information specified in Section 3.5 of the Company's Bylaws concerning each
person the shareholder proposes to nominate for election and the nominating
shareholder. The Company has not received any nominations for directors from
shareholders.
Board of Directors Committees. The Board of Directors appointed a standing
Audit Committee in February 1995. The Audit Committee is composed of Messrs.
Moore, Dempsey and Lopez-Ona. During the fiscal year ended December 31, 1999,
they met three times. The Audit Committee reviews the scope and results of the
independent annual audit. The Audit Committee also reviews the scope and
results of audits performed by the Company's internal auditor.
The Compensation Committee of the Board of Directors reviews employee
compensation and makes recommendations to the Board regarding changes in
compensation and also administers the Company's stock option plan and makes
grants of options thereunder. During the fiscal year ended December 31, 1999,
the Compensation Committee held one meeting. The members of the Compensation
Committee are Messrs. Hart, Moore, and Sullivan.
4
<PAGE>
Board Meetings. During the fiscal year ended December 31, 1999, the
Company's Board of Directors held five meetings.
Meeting Attendance. During the fiscal year ended December 31, 1999, all
current directors attended at least 75% of all meetings of the Board of
Directors and of the committees of the Board on which they served, except John
E. Lopez-Ona, who attended three of the five Board meetings, and all of the
three Audit Committee meetings, Donald H. Dempsey, who attended three of the
three Board meetings and the one Audit Committee meeting held after he joined
the Board in August of 1999, and David C. Sullivan, who attended four of the
four Board meetings held after he joined the Board in May 1999. Mr. Sullivan did
not attend the one Compensation Committee meeting, which was held before he
became a director.
Compensation of Directors. Each non-employee director was entitled to
receive the following payments for service on the Board during the fiscal year
ended December 31, 1999: (1) $1,000 for each regular Board meeting attended and
(2) $500 for each regular committee meeting attended ($750 per meeting for the
committee chair). In addition, each non-employee director was entitled to
receive on the day following the 1999 annual shareholder meeting: (1) a cash
payment of $10,000, (2) 2,580 shares of the Company's Class A Common Stock with
a fair market value equal to $10,000 on the date of payment, and (3) an option
to purchase 10,000 shares of the Company's Class A Common Stock. The stock and
options were issued pursuant to the 1999 Non-Employee Director Stock and Stock
Option Plan. Employee directors are not compensated for their services as
directors or committee members.
EXECUTIVE COMPENSATION
Cash Compensation
The following table sets forth the salary compensation, cash bonus and
certain other forms of compensation paid by the Company and its subsidiaries for
services rendered in all capacities during the 1999, 1998 and 1997 fiscal years
to the Chief Executive Officer of the Company and the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer serving at the end of the 1999 fiscal year (the "Named Executive
Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
--------------------- ---------------------------------
All Other
Name and Principal Positions Fiscal Year Salary ($) Bonus ($) Compensation ($) Securities Underlying Options (#)
- ---------------------------- ----------- ---------- --------- ---------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
John Q. Hammons 1999 250,000 90,000 -- --
Chairman of the Board and 1998 200,000 50,000 -- 200,000(b)
Chief Executive Officer 1997 150,000 -- -- --
Kenneth J. Weber (a) 1999 260,000 72,000 1,300(c) --
Executive Vice President 1998 169,840 57,500 -- 100,000(b)
and Chief Financial 1997 -- -- -- --
Officer
Lonnie A. Funk 1999 145,000 50,000 1,675(c) --
Senior Vice President, 1998 125,000 22,500 1,449(c) 40,000(b)
Operations 1997 112,500 20,000 1,453(c) --
Debra M. Shantz 1999 140,000 50,000 2,709(c) --
Corporate Counsel 1998 135,000 47,500 1,544(c) 70,000(b)
1997 97,500 40,000 1,139(c) --
Steven E. Minton 1999 135,000 50,000 1,787(c) --
Senior Vice President, 1998 130,000 45,000 1,563(c) 40,000(b)
Architecture 1997 118,000 40,000 1,275(c) --
</TABLE>
_________________
(a) Mr. Weber joined the Company in April of 1998.
(b) Comprised of options with an exercise price of $7.375 per share.
(c) Matching contributions to Company's 401(k) Plan.
5
<PAGE>
<TABLE>
<CAPTION>
Option Holdings Fiscal Year-End Option Values
Number of Unexercised Value of Unexercised
Options In-the-Money Options
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John Q. Hammons 50,000 150,000 -- --
Kenneth J. Weber 25,000 75,000 -- --
Lonnie A. Funk 10,000 30,000 -- --
Debra M. Shantz 17,500 52,500 -- --
Steven A. Minton 10,000 30,000 -- --
</TABLE>
The $7.375 exercise price per share of the stock options granted on June 5,
1998 (which comprise all of the options held by the Named Executive Officers) is
greater than the $3.875 closing price of the Company's Class A Common Stock as
reported on the New York Stock Exchange on December 31, 1999, thus no options
are "In the Money." The remaining options vest in three equal annual
installments on June 5, 2000, 2001 and 2002.
401(k) Plan
Effective January 1, 1996, the Company adopted a contributory retirement
plan (the "401(k) Plan") for its employees age 21 and over with at least one
year of service to the Company. The 401(k) Plan is designed to provide tax-
deferred income to the Company's employees in accordance with the provisions of
Section 401(k) of the Internal Revenue Code of 1986. The 401(k) Plan provides
that the Company will make a matching contribution to each participant's account
equal to 50% of such participant's eligible contributions up to a maximum of 3%
of such participant's annual compensation.
Employment Agreements
The Company entered into an employment agreement with Kenneth J. Weber,
effective April 27, 1998. Under that agreement, Mr. Weber's annual base salary
is $260,000, plus a discretionary bonus of up to 35% of his base salary, with
such annual increases in compensation as may be determined by the Compensation
Committee of the Company. The agreement contains significant non-competition
provisions extending for a period of one year following termination of the
agreement. The initial term of the agreement is for three years.
The Company entered into an employment agreement with Debra M. Shantz,
dated as of May 1, 1995 as amended on October 31, 1997. Under the agreement, Ms.
Shantz's annual base salary is $135,000, plus a discretionary bonus, with such
annual increases in compensation as may be determined by the Compensation
Committee of the Company. The agreement currently is scheduled to terminate on
October 31, 2000.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate other filings with the
Securities and Exchange Commission ("SEC"), including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee and
Comparative Company Performance Graph shall not be incorporated by reference
into any such filings.
Report of the Compensation Committee
The Company's executive compensation program provides competitive levels of
compensation designed to integrate pay with the Company's annual and long term
performance goals. Underlying this objective are the following concepts:
supporting an individual pay-for-performance policy that differentiates
compensation levels based on corporate and individual performance; motivating
key senior officers to achieve strategic business objectives and rewarding them
for that achievement; providing compensation opportunities which are competitive
to those offered in the marketplace, thus allowing the Company to compete for
and retain talented executives who are critical to the Company's long term
success; and aligning the interest of executives with the long term interest of
the Company's shareholders.
6
<PAGE>
In the interest of balancing all key shareholder interests, the
Compensation Committee believes that the compensation of the Chief Executive
Officer and Chief Financial Officer of the Company, along with the compensation
of other officers, should be comprised of a combination of base pay, short-term
annual incentive bonus and long-term stock options. While these elements are
balanced in total in comparison to other comparable organizations, the
Compensation Committee believes that potential compensation in the form of
performance-related variable compensation should be emphasized. Variable
compensation will be both short-term and long-term based. The resulting total
package has been designed to reward officers for the creation of long-term
shareholder value in excess of other comparable organizations.
Base Salary. In determining the appropriate amount of fixed base pay for
officers, the Compensation Committee compared the officers' base salaries with
those paid to other executives in the hotel industry.
Incentive Bonus. The bonus component paid to officers is structured to
generally pay bonuses upon fulfillment of predetermined corporate and individual
goals. Full bonus payouts to officers will be made only if the Company's
performance goals are exceeded. There are also certain discretionary bonuses
paid when deemed appropriate by the Compensation Committee.
Stock Options. To encourage growth and shareholder value, stock options
are granted under the Company's option plan to officers and other key employees
who are in a position to make substantial contributions to the long-term success
of the Company. The Compensation Committee believes that the grant of options
focuses attention on managing the Company from the perspective of an owner with
an equity stake in the business.
Chief Executive Officer Compensation. Mr. Hammons' compensation as
Chairman of the Board and Chief Executive Officer for the fiscal year ended
December 31, 1999 was $250,000. Mr. Hammons compensation will be $300,000 for
the fiscal year ending December 29, 2000. This continues to be below comparable
compensation for other chief executive officers in the hotel industry.
1999 Compensation Committee
---------------------------
David F. Sullivan, Director
James F. Moore, Director
William J. Hart, Director
Comparative Company Performance
The following table sets forth comparative information regarding the
Company's cumulative shareholder return on its Class A Common Stock from
December 30, 1994 (the last trading day before the beginning of the Company's
fifth preceding fiscal year) to December 31, 1999. Total shareholder return is
measured by dividing total dividends (assuming dividend reinvestment), if any,
plus share price change for a period by the share price at the beginning of the
measurement period. The Company's cumulative shareholder return is based on an
investment of $100 on December 30, 1994 and is compared to the cumulative total
return on the S&P 500 Index and the Lodging Peer Group. The graph displayed
below is presented in accordance with SEC requirements. Shareholders are
cautioned against drawing any conclusions from the data contained therein, as
past results are not necessarily indicative of future performance. These graphs
in no way reflect the Company's forecast of future financial performance.
7
<PAGE>
Comparison of Cumulative Total Return Among
-------------------------------------------
John Q. Hammons Hotels, Inc., S&P 500 Index and Lodging Peer Group
------------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Company December 1995 1996 1997 1998 1999
30, 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John Q. Hammons 100.00 56.07 61.61 64.29 26.34 27.68
- ----------------------------------------------------------------------------------------------
Peer Group 100.00 136.78 173.44 208.31 152.87 104.14
- ----------------------------------------------------------------------------------------------
Broad Market 100.00 137.58 169.17 225.61 290.09 351.13
- ----------------------------------------------------------------------------------------------
</TABLE>
Lodging Peer Group consists of three companies: Felcor Lodging Trust,
Inc., Host Marriott and Prime Hospitality.
ASSUMES $100 INVESTED ON DECEMBER 30, 1994
ASSUMES DIVIDENDS REINVESTED
This Section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company under
the Securities Act of 1933, as amended, or the Exchange Act.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee for the fiscal year ended December 31, 1999, was
comprised of three directors--Messrs. Sullivan, Moore and Hart.
The Partnership is controlled by Mr. Hammons through his control of the
Company, which is the sole general partner of the Partnership. His equity
interest in the Partnership (based on his beneficial ownership of 244,300 shares
of Class A Common Stock of the Company, all 294,100 shares of Class B Common
Stock of the Company and all 16,043,900 limited partnership units of the
Partnership (the "LP Units")) is 76.8%. There are significant potential
conflicts of interests between Mr. Hammons as a limited partner of the
Partnership, and the holders of Class A Common Stock of the Company, which
conflicts may be resolved in favor of Mr. Hammons.
8
<PAGE>
Holders of LP Units have the right to require the redemption of their LP
Units. This redemption right will be satisfied, at the sole option of the
Company, by the payment of the then cash equivalent thereof or by the issuance
of shares of Class A Common Stock on a one-for-one basis. Mr. Hammons
beneficially owns all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP
Units, requires the Partnership to redeem LP Units, the non-employee directors
of the Company would decide, consistent with their fiduciary duties as to the
best interests of the Company, whether to redeem the LP Units for cash or for
shares of Class A Common Stock. Mr. Hammons would not vote or otherwise
participate in the decision of the non-employee directors. Mr. Hammons has
informed the Company that he has no current plan to require the Partnership to
redeem his LP Units.
During 1999, the Partnership provided management services to five hotels
not owned by the Company (the "Managed Hotels") pursuant to management contracts
(the "Management Contracts"). Four of the Managed Hotels are owned by Mr.
Hammons and one is owned 50% by Mr. Hammons; 25% by Jacqueline A. Dowdy, the
Secretary and a director of the Company; and 25% by Lonnie A. Funk, an employee
of the Company. Mr. Funk acquired his interest from Daniel L. Earley in April,
1999. Management fees of approximately 3% of gross revenues were paid to the
Company by the Managed Hotels in the aggregate amount of $845,000 in the fiscal
year ended December 31, 1999. Each of the Management Contracts is for an initial
term of 20 years, which automatically extends for four periods of five years,
unless otherwise canceled. In addition to the management fees paid by the
Managed Hotels to the Partnership in that year, the Managed Hotels reimbursed
the Company for a portion of the salaries paid by the Company to its six
regional vice presidents, whose duties include management services related to
the Managed Hotels, and for certain marketing and other expenses allocated to
the Managed Hotels. Such reimbursed services and expenses aggregated $132,000 in
the fiscal year ended December 31, 1999.
The Partnership has an option granted by Mr. Hammons or persons or entities
controlled by him to purchase the Managed Hotels. The options are effective
until February 2009. If an option is exercised, the purchase price is based on
a percentage of the fair market value of the Managed Hotel as determined by an
appraisal firm of national standing. One hotel owned by the Company and two
Managed Hotels are located in Springfield, Missouri. These hotels are
potentially competing with one another for customers. The Company, however,
believes that these hotels do not significantly compete with one another due to
their respective locations and attributes.
Mr. Hammons has a 45% ownership interest in Winegardner & Hammons, Inc.
("WHI"). All of the hotels owned by the Company (the "Owned Hotels") have
contracted with WHI to provide accounting and other administrative services.
The accounting and administrative charges expensed by the Owned Hotels were
approximately $1,440,000 in the fiscal year ended December 31, 1999. The fee
may increase if the number of hotels for which accounting and administrative
services are performed drops below 35 hotels. The accounting services contract
expires in June, 2002.
The Company leases space in the John Q. Hammons Building for its
headquarters from a Missouri general partnership, of which Mr. Hammons is a 50%
partner and the remaining 50% is collectively held by other employees, including
Jacqueline A. Dowdy, the Secretary and a director of the Company, who is a 9.5%
partner. Pursuant to four lease agreements, expiring December 31, 2001, the
Company paid monthly rental payments of approximately $19,500 in 1999. The
Company made aggregate annual lease payments to the Missouri general partnership
of approximately $234,000 in 1999.
Mr. Hammons also owns trade centers adjacent to three of the Owned Hotels
(the "JQH Trade Centers"). The Company leases the convention space in the JQH
Trade Center located in Portland, Oregon from Mr. Hammons pursuant to a long-
term lease expiring in 2004, requiring annual payments of approximately
$300,000. With respect to the other two JQH Trade Centers, the Company makes
nominal annual lease payments to Mr. Hammons. The Company has assumed
responsibility for all operating expenses of the JQH Trade Centers.
The Company leases the real estate for the Company's Chateau on the Lake
Resort, opened in mid-1997, in Branson, Missouri, from Mr. Hammons. Annual rent
was $150,000 in 1999; an amount based on adjusted gross revenues from room sales
on the property. The lease term is 50 years, with an option to renew for an
additional 10 years. The Company also has an option to purchase the land after
March 1, 2118 at a proposed transfer price of the greater of $3,000,000 or the
current appraised value.
The Company also leases the real estate for the Company's Embassy Suites
hotel in Little Rock, Arkansas which opened in the fall of 1997, from Mr.
Hammons. Annual rent is $120,000 in 1999, and $120,000 per year for the next
two years. The lease term is 40 years. The Company has an option to purchase
the land at any time during the first 10 years of the lease term, for the
greater of $1,900,000 or the current appraised value.
9
<PAGE>
The Company also leases the real estate for the Company's Renaissance
Suites Hotel in Charlotte, NC, which opened in November, 1999 from Tulsa Hills
Investments, Inc., an Ohio corporation, of which Mr. Hammons is a 99% owner and
Jacqueline A. Dowdy is a 1% owner. The lease term is 99 years. The Company
made aggregate annual lease payments of $53,000 in 1999, will pay $120,000 per
lease year for the next two years, and will pay $124,800 in years three through
seven with cost of living adjustments for each year thereafter.
Mr. Hammons owns parcels of undeveloped land throughout the United States.
Although there are no current plans to do so, the Company may purchase or lease
one or more of these parcels in the future in order to develop hotels. Since
Mr. Hammons controls the Company, such transactions would not be arms-length
transactions but will be subject to restrictions contained in the indentures
relating to the Partnership's outstanding mortgage notes due in 2004 and 2005.
The Company receives no management fee or similar compensation in
connection with its management of the Partnership. The Company receives the
following remuneration from the Partnership; (i) distributions, if any, in
respect of its equity interest in the Partnership; and (ii) reimbursement for
all direct and indirect costs and expenses incurred by the Company for or on
behalf of the Partnership and all other expenses necessary or appropriate to the
conduct of the business of, and allocable to, the Partnership.
Certain Transactions
Mr. Hammons and Anvil Capital, an investment and consulting firm owned by a
director of the Company, Mr. Lopez-Ona, have formed a limited liability company
through which they have invested in securities of one or more companies in
industries unrelated to the Company's business.
Mr. Hart is a non-employee director of the Company, and is a member of the
law firm of Husch & Eppenberger, LLC, which performs legal services on a regular
basis for the Company and personally for Mr. Hammons. The Company paid such
firm approximately $276,000 in legal fees during the fiscal year ended December
31, 1999.
For a description of other transactions regarding Mr. Hammons, Ms. Dowdy,
and Mr. Earley, and the Company, see "Compensation Committee Interlocks and
Insider Participation."
The Company is unaware of any other transactions to which the Company is a
party in which any director or executive officer of the Company has or will have
a direct or indirect material interest.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 1, 2000 regarding
the beneficial ownership of Class A and Class B Common Stock of the Company by
each of the Company's executive officers and directors, and by the Company's
executive officers and directors as a group. The number of shares of Class A
Common Stock shown in the table gives effect to the conversion of all 294,100
shares of Class B Common Stock into an equal number of shares of Class A Common
Stock and also gives effect to the redemption of all 16,043,900 LP Units of the
Partnership for shares of Class A Common Stock on a one-for-one basis. Except
as indicated in the footnotes, all shares set forth in the table are owned
directly, and the indicated person has sole voting and investment power with
respect to all shares shown as beneficially owned by such person.
<TABLE>
<CAPTION>
Name and Address of Shares of Class A Common Stock Shares of Class B Common Stock
Beneficial Owner (a) Number of Shares Percentage Number of Shares Percentage
- -------------------- ---------------- ---------- ---------------- ----------
Executive Officers and Directors:
<S> <C> <C> <C> <C>
John Q. Hammons 16,582,300(b) 77.2% 294,100 100%
Jacqueline A. Dowdy 25,603(c) *
Donald H. Dempsey 1,000 *
Daniel L. Earley 4,580(d) *
Lonnie A. Funk 1,200(e) *
William J. Hart 3,080(f) *
John E. Lopez-Ona 6,000 *
James F. Moore 3,280(g) *
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Stephen E. Minton 1,202(h) *
David C. Sullivan 2,580(i) *
Debra M. Shantz 500(j) *
Kenneth J. Weber -- (k)
All executive officers and directors, as a
group (12) 16,631,325 77.38% 294,100 100%
(b)(c)(d)(e)(f)(g)(h)(i)
(j)(k)
</TABLE>
* Less than 1%
(a) The address of each of the executive officers and directors of the Company
is 300 John Q. Hammons Parkway, Suite 900, Springfield, Missouri 65806.
(b) Includes 244,300 outstanding shares of Class A Common Stock. Also includes
294,100 shares of Class B Common Stock convertible into Class A Common
Stock on a share-for-share basis at any time and which will be
automatically converted into Class A Common Stock upon the occurrence of
certain events. Prior to conversion of the Class B Common Stock and
without giving effect to the redemption of the LP Units, the Class B Common
Stock (which has 50 votes per share) represents 73.92% of the combined
voting power of both classes of the Company's outstanding Company Stock.
Also includes 16,043,900 LP Units of the Partnership redeemable, at the
sole option of the Company, by payment of the then cash equivalent of such
LP Units or by the issuance of shares of Class A Common Stock on a one-for-
one basis. Remaining LP Units are owned for Mr. Hammons' benefit through
Hammons, Inc., of which the John Q. Hammons Revocable Living Trust dated
December 26, 1986, as amended, is the sole shareholder. Also includes
exercisable options to purchase 50,000 shares.
(c) Includes approximately 603 shares allocated to 401(k) Plan account as of
the end of 1999, and exercisable options to purchase 6,250 shares.
(d) Includes exercisable options to purchase 2,500 shares.
(e) Includes exercisable options to purchase 10,000 shares. Mr. Funk holds
sole voting and investment power with regard to 100 shares and holds shared
voting and investment power with regard to 1,100 shares.
(f) Includes exercisable options to purchase 2,500 shares.
(g) Includes exercisable options to purchase 2,500 shares.
(h) Includes approximately 202 shares allocated to 401(k) Plan account as of
the end of 1999, and exercisable options to purchase 10,000 options.
(i) Includes exercisable options to purchase 2,500 shares.
(j) Includes exercisable options to purchase 17,500 shares.
(k) Includes exercisable options to purchase 25,000 shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information at December 31, 1999 with
respect to ownership of Class A Common Stock by each person believed by
management to be the beneficial owner of more than 5% of the outstanding Class A
Common Stock. The information set forth below is based on beneficial ownership
information contained in the most recent Schedule 13D or 13G filed on behalf of
such person with the SEC. The percentages shown are based on the outstanding
shares of Class A Common Stock after giving effect to the conversion of all
294,100 shares of Class B Common Stock into an equal number of shares of Class A
Common Stock and to the redemption of all 16,043,900 LP Units for shares of
Class A Common Stock.
11
<PAGE>
<TABLE>
<CAPTION> Percent of Class A
Name and Address of Amount and Nature of Common Stock
Beneficial Owner Beneficial Ownership Outstanding
---------------- -------------------- -----------
<S> <C> <C>
James M. Clark, Jr. 556,900 (a) 9.6%
52 Vanderbilt Ave.
New York, NY 10017
First Manhattan Co. 540,182 (b) 9.6%
437 Madison Avenue
New York, NY 10022
</TABLE>
(a) Based on Schedule 13D dated May 2, 1999. According to the Schedule 13D,
Mr. Clark has sole voting and dispositive power as to 519,000 shares and
shared voting and dispositive power as to 37,900 shares (held in family
trusts and a charitable foundation). The filing was also made on behalf of
Susanna L. Porter. Ms. Porter has sole voting and dispositive power as to
11,000 shares.
(b) Based on Schedule 13D dated February 9, 2000. According to the Schedule
13D, includes 22,300 shares owned by family members of general partners of
First Manhattan Corp. ("FMC"). FMC disclaims dispositive powers as to
7,200 of such shares and beneficial ownership as to 15,100 of such shares.
Of the remaining shares, FMC has sole voting and dispositive powers as to
41,500 shares, shared voting powers as to 486,467 shares and shared
dispositive powers as to 498,682 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers to file with the SEC initial reports of
ownership of the Company's equity securities and to file subsequent reports when
there are changes in such ownership. Based on a review of reports submitted to
the Company, the Company believes that all Section 16(a) filing requirements
applicable to the Company's directors and officers during the fiscal year ended
December 31, 1999, were complied with on a timely basis.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal Two)
The Board of Directors has appointed the firm of Arthur Andersen LLP to act
as independent auditors for the Company for the fiscal year ending December 29,
2000, subject to ratification of such appointment by the Company's shareholders.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting,
will have the opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
Arthur Andersen LLP was retained by the Company in 1993 to act as
independent auditors for the Company in connection with an audit for the 1990,
1991, 1992 and 1993 fiscal years. The firm was subsequently retained on an
annual basis in connection with an audit for each fiscal year since that time.
The affirmative vote of the majority of the votes cast is required to
ratify the appointment of the independent auditors.
Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Arthur Andersen LLP to audit the books and
accounts of the Company for the fiscal year ending December 29, 2000. No
determination has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
The Board of Directors unanimously recommends that shareholders vote FOR
the ratification of the selection of the Company's independent auditors.
12
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the Company's proxy
statement and form of proxy relating to the Company's 2001 annual meeting of
shareholders must be received by the Company by December 1, 2000, pursuant to
the proxy soliciting regulations of the SEC. In addition, the Company's Bylaws
require that notice of shareholder proposals and nominations for director be
delivered to the Secretary of the Company not less than 120 days nor more than
180 days prior to the date of an annual meeting, unless notice or public
disclosure of the date of the meeting occurs less than 130 days prior to the
date of such meetings, in which event, shareholders may deliver such notice not
later than the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure thereof was made. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement or the form of proxy for such meeting any shareholder proposal which
does not meet the requirements of the SEC in effect at the time.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be presented for action by the
shareholders at the 2000 Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with the determination of
a majority of the Board of Directors.
13
<PAGE>
JOHN Q. HAMMONS HOTELS, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned shareholder of John Q. Hammons Hotels, Inc. hereby appoints
Paul Muellner and Debra M. Shantz, or either of them, as proxies to cast all
votes which the undersigned shareholder is entitled to cast at the annual
meeting of shareholders to be held on Tuesday, May 2, 2000 at 9:00 a.m.,
local time, at the University Plaza Convention Center, 730 E. St. Louis
Street, Springfield, Missouri, and at any adjournments or postponements
thereof, upon the following matters. The undersigned shareholder hereby
revokes any proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1, AND FOR PROPOSAL 2, AND IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS.
The undersigned shareholder may revoke this proxy at any time before it is
voted by delivering to the General Counsel of the Company either a written
revocation of the proxy or a duly executed proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person. The undersigned
shareholder hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement.
(continued and to be signed and dated on reverse side)
1. Election of Directors.
For three-year terms: Daniel L. Earley, John Q. Hammons, and James F.
Moore.
FOR all nominees listed above WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed above
contrary below).
[_] [_]
___________________________________________________________________________
(Instruction: To withhold authority to vote for any individual nominee,
print that nominee's name in the space provided.)
2. Ratification of appointment of Arthur Andersen LLP as independent
auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the proxies, or either of them, are authorized to
vote upon such other business as may properly come before the meeting,
or any adjournments or postponements thereof.
If you receive more than one proxy card, please sign and return ALL cards
in the accompanying envelope.
Date: __________________________________________________
________________________________________________________
Signature of Shareholder or Authorized Representative
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. Only one signature is required in the
case of stock ownership in the name of two or more persons, but all should sign
if possible.
