def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment No. )
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Soliciting Material under §240.14a-11(c) or §240.14a-12
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Chatham Lodging Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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50 Cocoanut Row, Suite 216
Palm Beach, FL 33480
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 26,
2011
TO OUR
SHAREHOLDERS:
The Annual Meeting of the Shareholders of Chatham Lodging Trust
(the Company) will be held at the Brazilian Court
hotel at 301 Australian Avenue, Palm Beach, Florida 33480, on
Thursday, May 26, 2011, at 9:00 a.m., for the
following purposes:
1. To elect the trustees nominated by the Board of Trustees
to hold office until the 2012 Annual Meeting of Shareholders and
until their successors are elected and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as
the Companys independent auditors for fiscal year 2011;
3. To hold an advisory vote on executive compensation as
disclosed in these materials;
4. To hold an advisory vote on whether an advisory vote on
executive compensation should be held every one, two or three
years; and
5. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on
April 1, 2011, are entitled to notice of, and to vote at,
the meeting. All shareholders are requested to be present in
person or by proxy. Any shareholder who later finds that he or
she can be present at the meeting, or for any reason desires to
do so, may revoke the proxy at any time before it is voted.
There is enclosed, as a part of this Notice, a Proxy Statement
which contains further information regarding the Annual Meeting.
Please read it carefully, and vote. Your cooperation is
appreciated, because a majority of the common shares must be
represented, either in person or by proxy, to constitute a
quorum for the conduct of business.
BY ORDER OF THE BOARD OF TRUSTEES,
PETER WILLIS
Executive Vice President and Secretary
Palm Beach,
Florida
April 22, 2011
We want your shares represented at the Annual Meeting
regardless of the number of shares you hold. By following the
instructions on the enclosed proxy card, your shares will be
voted even if you are unable to attend the Annual Meeting. If
you attend the Annual Meeting and prefer to vote in person or
change your proxy vote, you may do so at any time before the
vote is finalized.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
May 26, 2011
SOLICITATION
AND REVOCATION OF PROXY
Proxies in the form furnished are solicited by the Board of
Trustees of the Company to be voted at the annual meeting of
shareholders to be held on May 26, 2011, or any
adjournments (the Annual Meeting). The individuals
named as proxies are Jeffrey Fisher and Dennis Craven. This
Proxy Statement and the accompanying proxy card and Notice of
Annual Meeting are first being mailed on or about April 22,
2011 to shareholders of record at the close of business on
April 1, 2011.
All shares represented by proxies received will be voted in
accordance with instructions contained in the proxies. The Board
of Trustees unanimously recommends a vote:
1. FOR the nominees for Trustee listed in these materials
and on the proxy;
2. FOR the ratification of the selection of the
Companys independent auditors;
3. FOR the approval, on an advisory basis, of the
compensation of the Companys named executive officers as
disclosed in these materials; and
4. FOR a frequency of every three years for future advisory
votes on executive compensation.
In the absence of voting instructions to the contrary, shares
represented by validly executed proxies will be voted in
accordance with the foregoing recommendations. A shareholder
giving a proxy has the power to revoke it any time before it is
voted by providing written notice to the Secretary of the
Company, by delivering a later-dated proxy, or by voting in
person at the Annual Meeting.
Only shareholders of record at the close of business on
April 1, 2011 (the Record Date) will be
entitled to vote at the Annual Meeting. At the close of business
on the Record Date, there were 13,820,854 common shares
outstanding, which represent all of the voting securities of the
Company. Each common share is entitled to one vote. Shareholders
do not have cumulative voting rights in the election of Trustees.
A majority of the common shares entitled to vote at the Annual
Meeting, present either in person or by proxy, will constitute a
quorum. Shareholders who abstain from voting on any or all
proposals will be included in the number of shareholders present
at the meeting for purposes of determining the presence of a
quorum. Abstentions and broker non-votes will not be included in
the total of votes cast and will not affect the outcome of the
vote.
With respect to proposal 1, the election of Trustees, the
affirmative vote of a plurality of the votes cast at the meeting
is required to elect a trustee.
With respect to proposal 2, the ratification of the
selection of the Companys independent auditors, the votes
that shareholders cast for must exceed the votes
that shareholders cast against to approve.
With respect to proposal 3, the advisory vote on executive
compensation, the votes that shareholders cast for
must exceed the votes that shareholders cast against
to approve.
With respect to proposal 4, the frequency of the advisory
vote on executive compensation, the alternative receiving the
greatest number of votes every year, every two years
or every three years will be the frequency that
shareholders approve.
If your shares are held by a broker on your behalf (that is, in
street name), and you do not instruct the broker as
to how to vote these shares on proposals 1, 3, or 4, the
broker may not exercise discretion to vote for or against those
proposals. This would be a broker non-vote and these
shares will not be counted as having been voted on the
applicable proposal. With respect to proposal 2, the broker
may exercise its discretion to vote for or against that proposal
in the absence of your instruction. Please instruct your bank
or broker so your vote can be counted.
TABLE OF CONTENTS
PROPOSAL 1:
ELECTION OF TRUSTEES
Your vote is requested in favor of nine trustees to serve until
the next annual meeting of shareholders and until their
successors are duly elected and qualified. Each of the nominees
is currently a trustee of the Company and each of their terms
expires at this annual meeting.
The Companys bylaws provide that the number of trustees
shall be determined from time to time by the Board of Trustees,
but may not be less than one. The Companys Board of
Trustees currently consists of nine persons.
Trustees typically are elected for a period of one year and
thereafter serve until the next annual meeting at which their
successors are duly elected by our shareholders. Each nominee
for election has agreed to serve if elected, and we have no
reason to believe that any nominee will be unavailable to serve.
If any nominee is unable or declines to serve as a trustee at
the time of the annual meeting, the proxies named in the proxy
card will vote for a nominee designated by the present Board of
Trustees to fill the vacancy. Unless otherwise instructed, the
proxies named in the proxy card will vote all of the shares for
which they hold proxies FOR the nominees
named below.
Each nominee has indicated a willingness and ability to serve as
a Trustee. If any nominee becomes unable or unwilling to serve,
the accompanying proxy may be voted for the election of such
other person as will be designated by the Board of Trustees.
Each Trustee will be elected by a plurality of the votes cast,
in person or by proxy, at the Annual Meeting, assuming a quorum
is present.
The following candidates for election have been nominated by the
Board based on the recommendation of the Nominating and
Governance Committee. In addition to the information presented
below regarding each nominees specific experience,
qualifications, attributes and skills that led the Board to
conclude that he should serve as a Trustee, the Board believes
that each nominee has demonstrated outstanding achievement in
his professional career; relevant experience; personal and
professional integrity; ability to make independent, analytical
inquiries; experience with and understanding of the business
environment; and willingness and ability to devote adequate time
to Board duties. We also believe that our Trustees collectively
have the skills and experience to create a board that is
well-suited to oversee the Company. Members of our Board have
had a great diversity of experiences and bring to our Board a
wide variety of views that strengthen their ability to guide our
Company.
The Board
of Trustees unanimously recommends that you vote FOR
Proposal 1.
Trustees
The following table sets forth information regarding each
nominee for election as a trustee.
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Name
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Age
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Position
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Jeffrey H. Fisher
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55
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Chairman, President and Chief Executive Officer
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Miles Berger
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80
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Trustee
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Thomas J. Crocker
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57
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Trustee
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Jack P. DeBoer
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79
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Trustee
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Glen R. Gilbert
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66
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Trustee
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C. Gerald Goldsmith
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82
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Trustee
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Robert Perlmutter
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49
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Trustee
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Rolf E. Ruhfus
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66
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Trustee
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Joel F. Zemans
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69
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Trustee
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Set forth below is information with respect to each trustee of
the Company.
Jeffrey
H. Fisher
Mr. Fisher is our Chairman of the Board, Chief Executive
Officer and President. Mr. Fisher is also the majority
shareholder of Island Hospitality Management Inc.
(IHM), a firm he founded in 2007 that currently
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manages 71 hotels for unaffiliated hotel owners and five
(5) of our hotels. From 1994 to 2007, Mr. Fisher was
chairman, chief executive officer and president of Innkeepers
USA Trust (Innkeepers), a lodging REIT he founded
and took public in 1994 and was also chairman and majority
shareholder of Innkeepers Hospitality, a privately owned hotel
management company. Mr. Fisher grew Innkeepers
portfolio from seven hotels at the time of its initial public
offering to 74 hotels at the time of its sale. In June of 2007,
Innkeepers was sold to an institutional investor at a total
enterprise value of $1.5 billion. Between 1986 and 1994, he
served as President and Chief Executive Officer of JF Hotel
Management, Inc.
Mr. Fisher received a Bachelor of Science degree in
Business Administration from Syracuse University in 1977, a
Doctor of Jurisprudence degree from Nova Southeastern University
in 1980, and a Masters of Law in Taxation from the University of
Miami in 1981. He is a licensed attorney and practiced at
Jones & Foster P.A. and Jeffrey H. Fisher P.A. for a
total of five years prior to starting his career in the
hospitality industry. Additionally, Mr. Fisher currently
serves as a Board Member of Marriotts The Residence Inn
Association (TRIA).
Miles
Berger
Mr. Berger has been engaged in real estate, banking and
financial services since 1950. In 1998, Mr. Berger became
Chairman and Chief Executive Officer of Berger Management
Services LLC, a real estate and financial consulting and
advisory services company. From 1969 to 1998, he served as Vice
Chairman of the Board of Heitman Financial Ltd., a real estate
investment management firm. Mr. Berger served for more than
thirty years, until 2001, as Chairman of the Board of MidTown
Bank and Trust Company of Chicago, served as Vice Chairman
of Columbia National Bank Corp. from
1965-1995
and was Chairman of the Board of Berger Financial Services, a
full-service real estate advisory and financial services company
from 1950 to 2006. Mr. Berger has served on the board of
trustees of Universal Health Realty Income Trust, a publicly
traded health care REIT, since December 1998. Mr. Berger
also serves on the Board of Directors of Medallion Bank and
serves on the boards of numerous philanthropic organizations.
Mr. Berger previously served on the Board of Trustees of
Innkeepers from September 1994 until Innkeepers sale in
June 2007.
Thomas
J. Crocker
Mr. Crocker is Chief Executive Officer and principal
investor of Crocker Partners, LLC, a privately-held real estate
investment company, which is the general partner of a real
estate private equity fund, Crocker Partners IV, L.P.
Mr. Crocker was previously the Chief Executive Officer of
CRT Properties, Inc. (formerly known as Koger Equity, Inc.),
until its sale in September 2005. CRT Properties, Inc. was a
NYSE listed corporation which owned or had interests in more
than 137 office buildings, containing 11.7 million rentable
square feet, primarily located in 25 suburban and urban office
projects in 12 metropolitan areas in the Southeastern United
States, Maryland and Texas. Prior to joining Koger Equity, Inc.
in March 2000, Mr. Crocker was Chairman of the Board and
Chief Executive Officer of Crocker Realty Trust, Inc., a
privately-held REIT, which owned and operated approximately
6.2 million square feet in 133 office buildings located in
six states in the Southeast, plus more than 125 acres of
developable land. Previously, Mr. Crocker was Chairman of
the Board and Chief Executive Officer of Crocker Realty Trust,
Inc., which was an office-based publicly-held REIT in the
southeast U.S., from that companys inception until June
1996, when it merged with Highwoods Properties, a publicly-held
REIT. Prior to forming Crocker Realty Trust, Inc.,
Mr. Crocker headed Crocker & Co., a
privately-held firm responsible for development, leasing and
property management services to approximately 1.7 million
square feet of commercial property and 272 residential units.
Prior to 1984, Mr. Crocker was a real estate lending
officer at Chemical Bank. Mr. Crocker previously served on
the Board of Trustees of Innkeepers from February 1997 until
Innkeepers sale in June 2007.
Jack
P. DeBoer
Mr. DeBoer is Chairman of Consolidated Holdings, Inc., a
private investment company focusing on real estate development
and management. Mr. DeBoer is also the Chairman of the
Board and majority owner of Value Place LLC, owner of the
franchise rights to the Value Place brand of hotels, which
provides affordable extended-stay lodging. Mr. DeBoer
served as Chairman of the Board, President and Chief Executive
Officer of
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Candlewood Hotel Company, Inc. from its inception in 1995 until
it was acquired in December 2003. From October 1993 to September
1995, Mr. DeBoer was self-employed and engaged in the
development of the Candlewood extended-stay hotel concept. From
1988 to 1993, Mr. DeBoer co-founded and developed
Summerfield Hotel Corporation, an upscale extended-stay hotel
chain. Previously, Mr. DeBoer founded and developed the
Residence Inn franchise prior to selling the franchise to
Marriott in 1987. Mr. DeBoer previously served on the Board
of Trustees of Innkeepers from November 1996 until
Innkeepers sale in June 2007.
Glen
R. Gilbert
Mr. Gilbert has been employed by BFC Financial Corporation,
a publicly-traded savings bank and real estate holding company,
since November 1980. During that period, Mr. Gilbert served
in several senior management positions, including as Chief
Financial Officer from May 1987 to April 2007 and as Executive
Vice President from July 1997 to April 2007. Mr. Gilbert
also served as Senior Executive Vice President for Levitt
Corporation (now known as Woodbridge Holdings Corp.), a then
publicly-traded home builder and real estate developer, from
August 2004 to December 2005, after serving as its Chief
Financial Officer and Executive Vice President from April 1997
to August 2004. Mr. Gilbert has also held various executive
and chief financial officer positions for other entities related
to BFC Financial Corporation. Mr. Gilbert was a certified
public accountant from 1970 through 2008 and graduated from the
University of Florida with a B.S.B.A. degree in accounting.
Mr. Gilbert began his accounting career with KPMG LLP in
1970.
Goldsmith has been an independent investor and financial advisor
since 1976. He is currently Chairman of the Board of First Bank
of the Palm Beaches, a community bank in Palm Beach County,
Florida, and Chairman of Property Corp. International, a private
real estate investment company. He has served as a director of
several banks and NYSE-listed companies and various
philanthropic organizations. He holds an A.B. from the
University of Michigan and an M.B.A. from Harvard Business
School. Mr. Goldsmith previously served on the Board of
Trustees of Innkeepers from September 1994 until
Innkeepers sale in June 2007.
Robert
Perlmutter
Robert Perlmutter is the managing member of Davis Street Land
Company, LLC, a privately held firm focused on the development,
management and ownership of upscale shopping centers, which
currently owns 2.0 million square feet of retail
properties. From 1983 to 1988, Mr. Perlmutter worked as an
investment analyst for Heitman Financial Services, Ltd. in its
acquisitions and dispositions division. From 1988 to 1990, he
served as Heitman Financials President, a capacity in
which he was responsible for overseeing all of its acquisitions,
financings and dispositions. Mr. Perlmutter subsequently
served as Chief Executive Officer of Chicago-based Heitman
Retail Properties from 1990 to 1998, where he supervised overall
operations and growth of its retail holdings from two retail
properties to twenty directly managed malls and twenty-nine
joint ventures in regional malls. From 1998 to 2001, he also
served on the board of directors of Prime Retail Inc., a
NYSE-listed outlet center company. He is a member of the
International Council of Shopping Centers and a board member of
the First Bank of Highland Park. Mr. Perlmutter received a
Bachelor of Sciences degree in business administration, with a
concentration in real estate, from the University of Colorado.
Rolf
E. Ruhfus
Mr. Ruhfus is Chairman and Chief Executive Officer of
LodgeWorks Corporation, a hotel development and management
company, which owns the Hotel Sierra and AVIA hotel brands.
Mr. Ruhfus also serves as Chairman and Chief Executive
Officer of Wichita Consulting Company, L.P., a consulting
services company. Previously, Mr. Ruhfus served as the
Chairman and Chief Executive Officer of Summerfield Hotel
Corporation, an upscale extended-stay hotel chain, from its
founding in 1988 until its sale to Wyndham International, Inc.
in 1998. Mr. Ruhfus served as President of the Residence
Inn Company from February 1983 through July 1987 (when it was
acquired by Marriott International, Inc.). Mr. Ruhfus
joined the Residence Inn Company
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after spending four years as Director of Marketing for VARTA
Battery, Europes largest battery manufacturer. Prior to
this position, he was a management consultant for McKinsey and
Company in its Dusseldorf, Germany office. Mr. Ruhfus was a
German Air Force Lieutenant and received a bachelors
degree from Western Michigan University in 1968. His graduate
degrees include an M.B.A. from the Wharton School at the
University of Pennsylvania in 1971 and a Ph.D. in marketing from
the University of Muenster in 1974. Mr. Ruhfus is a member
of the international chapter of The Young Presidents
Organization and serves on the board of several European
companies. Mr. Ruhfus previously served on the Board of
Trustees of Innkeepers from July 1997 until Innkeepers
sale in June 2007.
Joel
F. Zemans
Mr. Zemans has been active in the ownership and operation
of real estate and banks since 1969. From 1971 through 1976, he
served as Executive Vice President (and through 1984 as a
Director) of Chicago Properties Corporation, a real estate
development company specializing in the rehabilitation of
multi-unit
residential properties in Chicago. Between 1976 and 2001,
Mr. Zemans served as President and Chief Executive Officer
of de novo Mid Town Bancorp, Inc. and its subsidiary, Mid Town
Bank and Trust Company of Chicago, and as Chairman and
Chief Executive Officer of two wholly-owned subsidiaries, Mid
Town Development Corporation and Equitable Finance Corporation.
He currently serves as a consultant to businesses and
individuals for real estate financing, investing and strategic
planning. Mr. Zemans also serves on the Board of Directors
of Bright Electric Supply and MBA Building Supplies, and he
provides pro-bono consulting to a number of
not-for-profit
organizations. Mr. Zemans holds both a B.A. and an M.B.A.
from the University of Chicago. Mr. Zemans previously
served on the Board of Trustees of Innkeepers from November 2001
until Innkeepers sale in June 2007. Mr. Zemans also
served on the board of Mid America Bank from 2001 to 2004.
Biographical
Information Regarding Executive Officers Who Are Not
Trustees
Peter
Willis Executive Vice President & Chief
Investment Officer
Mr. Willis is our Executive Vice President &
Chief Investment Officer. Mr. Willis has over 20 years
of hotel acquisition experience. From 2001 to 2006, he served as
Vice President of Acquisitions & Business Development
for Innkeepers and oversaw over $500 million of investments
in 18 hotels. From June 2006 to January 2009, Mr. Willis
served as Senior Vice President at The Kor Group, a privately
held, fully integrated real estate investment firm with a
portfolio of over $2 billion in upscale hotel and resort
investments, where he focused on U.S. and Caribbean
acquisitions and third-party management contracts. While
evaluating, negotiating and underwriting specific hotel
investments and obtaining and negotiating management contract
prospects, Mr. Willis also supported strategic acquisition
and corporate planning efforts.
Mr. Willis also held positions with an industry-leading
firm supporting the opening of luxury hotels. Establishing the
organizations first international operation in the
Asia/Pacific region in 1994, he directed the repositioning and
opening of properties throughout the region and in the United
States. By 2001, Mr. Willis led overall strategic planning,
business development and investor relations, as well as
integrating acquisitions among the firms operating
entities. Mr. Willis began as an analyst and asset manager
of hotel, residential and commercial properties for Japanese
investment firm JDC America in Tokyo and in the United States.
Mr. Willis received a Bachelor of Science in Business
Administration from the University of Florida in 1989 and has
completed professional programs at Cornell Universitys
Hotel School and Obirin University in Tokyo.
Dennis
M. Craven Executive Vice President & Chief
Financial Officer
Mr. Craven joined our company on September 9, 2010 as
our Executive Vice President and Chief Financial Officer.
Mr. Craven previously served as executive vice president
and chief financial officer of Innkeepers from March 2006 until
the acquisition of Innkeepers by an affiliate of Apollo
Investment Corporation in June 2007. Following the acquisition,
he continued to serve as chief financial officer of Innkeepers
until August 2010. Prior to joining Innkeepers in 2006,
Mr. Craven was a partner in Addison Capital Advisors, a
venture capital firm based in Memphis, Tennessee, and served as
senior vice president and
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chief accounting officer of Independent Bank in Memphis. Prior
to that, he served as vice president and controller, and later
vice president and chief accounting officer, of RFS Hotel
Investors, Inc., a NYSE-listed hotel REIT. Prior to joining RFS,
he was a senior manager with PricewaterhouseCoopers LLP in
Memphis and London. Mr. Craven received a Bachelor of
Accountancy from the University of Mississippi in 1993. He is a
licensed Certified Public Accountant in the State of Mississippi.
Trustee
Independence
Our Corporate Governance Guidelines, which are available on our
website at www.chathamlodgingtrust.com, require that a majority
of our trustees be independent. Our Board of Trustees has
adopted the categorical standards prescribed by the New York
Stock Exchange (the NYSE) to assist the Board of
Trustees in evaluating the independence of each trustee. The
categorical standards describe various types of relationships
that could potentially exist between a board member and our
Company and sets thresholds at which such relationships would be
deemed to be material. Provided that no relationship or
transaction exists that would disqualify a trustee under the
categorical standards and the Board of Trustees determines,
taking into account all facts and circumstances, that no other
material relationship between our Company and the trustee exists
of a type not specifically mentioned in the categorical
standards, the Board of Trustees will deem such person to be
independent. A trustee shall not be independent if he or she
satisfies any one or more of the following criteria:
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a trustee who is, or who has been within the last three years,
an employee of our Company, or whose immediate family member is,
or has been within the last three years, an executive officer of
the Company;
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a trustee who has received, or who has an immediate family
member serving as an executive officer who has received, during
any twelve-month period within the last three years more than
$120,000 in direct compensation from our Company (excluding
trustee and committee fees and pension/other forms of deferred
compensation for prior service that is not contingent in any way
on continued service);
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(i) a trustee who is or whose immediate family member is a
current partner of a firm that is our Companys internal or
external auditor; (ii) a trustee who is a current employee
of such a firm; (iii) a trustee who has an immediate family
member who is a current employee of such a firm and personally
works on the Companys audit; or (iv) a trustee who
was or whose immediate family member was within the last three
years (but is no longer) a partner or employee of such a firm
and personally worked on our Companys audit within that
time;
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a trustee who is or has been within the last three years, or
whose immediate family member is or has been within the last
three years, employed as an executive officer of another company
where any of our Companys present executives at the same
time serves or served on that companys compensation
committee; or
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a trustee who is a current employee, or whose immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, our Company for
property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million or 2%
of such other companys consolidated gross revenues (as
reported for the last completed fiscal year).
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Under these criteria, our Board of Trustees has determined that
the following members of our Board of Trustees are independent:
Miles Berger, Thomas J. Crocker, Jack P. DeBoer, Glen R.
Gilbert, C. Gerald Goldsmith, Robert Perlmutter, Rolf E. Ruhfus
and Joel F. Zemans. We presently have nine trustees, including
these eight independent trustees.
Committees
of the Board
Our Board of Trustees has appointed an Audit Committee,
Compensation Committee and a Nominating and Corporate Governance
Committee, and has adopted charters for each of these committees
which are available on our website at
www.chathamlodgingtrust.com. Pursuant to these charters, the
composition of each
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committee is required to comply with the listing standards and
other rules and regulations of the NYSE, as amended or modified
from time to time. Each of these committees is comprised
exclusively of independent trustees, as defined by the listing
standards of the NYSE then in effect.
Audit
Committee
Our Audit Committee consists of Messrs. Gilbert (Chair),
Berger and Zemans. The Audit Committee makes recommendations
concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the
independence of the independent public accountants, considers
the range of audit and non-audit fees and reviews the adequacy
of our internal accounting controls.
Mr. Gilbert, an independent trustee, is the chair of our
Audit Committee and is our audit committee financial expert as
that term is defined in the rules and regulations of the
Securities and Exchange Commission (SEC).
Compensation
Committee
Our Compensation Committee consists of Messrs. Goldsmith
(Chair), Berger and Zemans. The Compensation Committee
determines compensation for our executive officers and trustees,
administers our Equity Incentive Plan, produces an annual report
on executive compensation for inclusion in our annual meeting
proxy statement and publishes an annual committee report for our
shareholders.
Nominating
and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of
Messrs. Crocker (Chair) and Goldsmith. The Nominating and
Corporate Governance Committee is responsible for seeking,
considering and recommending to the board qualified candidates
for election as trustees and recommending a slate of nominees
for election as trustees at the annual meeting. It also
periodically prepares and submits to the board for adoption the
committees selection criteria for trustee nominees. It
reviews and makes recommendations on matters involving general
operation of the board and our corporate governance, and it
annually recommends to the board nominees for each committee of
the board. In addition, the committee annually facilitates the
assessment of the Board of Trustees performance as a whole
and of the committees and individual trustees and reports
thereon to the board. Shareholders may make recommendations of
potential trustee nominees to the Nominating and Corporate
Governance Committee, Chatham Lodging Trust, 50 Cocoanut Row,
Suite 216, Palm Beach, FL 33480. Such communications should
include information both on the recommending shareholder and the
recommended person so the Nominating and Corporate Governance
Committee may have adequate information to evaluate the
candidate. The process for considering trustee nominees by
shareholders is the same as the process for nominees recommended
by our Board or our Nominating and Corporate Governance
Committee.
Code of
Ethics
We have adopted a corporate code of ethics relating to the
conduct of our business by our employees, officers and trustees.
We intend to maintain the highest standards of ethical business
practices and compliance with all laws and regulations
applicable to our business, including those relating to doing
business outside the U.S. Specifically, our code of ethics
prohibits payments, directly or indirectly, to any foreign
official seeking to influence such official or otherwise obtain
an improper advantage for our business.
Compensation
Committee Interlocks and Insider Participation
None of the trustees serving on our Compensation Committee is or
has ever been one of our officers or employees, nor have any of
our trustees serving on our Compensation Committee entered into
any transaction with us with a value in excess of $120,000. None
of our executive officers, and no trustee serving on our
7
Compensation Committee, serves as a member of the Board of
Trustees (or board of directors) or Compensation Committee of
any entity that has one or more executive officers serving on
our Board of Trustees.
Trustee
Compensation
Each of our independent trustees who does not serve as the
chairman of one of our committees is paid a trustees fee
of $75,000 per year. The trustees who serve as our lead trustee,
Audit Committee chairman, Compensation Committee chairman and
Nominating and Corporate Governance Committee chairman are paid
an additional cash fee of $10,000, $10,000, $7,500 and $5,000,
respectively. Trustees fees, excluding those trustees who
do not serve as the lead trustee or chairman of one of our
committees, are paid one-half in cash and one-half in our common
shares although each trustee may elect to receive up to all of
his trustee fees in the form of our common shares. Trustees who
are employees receive no additional compensation as trustees. In
addition, we reimburse all trustees for reasonable
out-of-pocket
expenses incurred in connection with their services on the Board
of Trustees.
The following table sets forth information with respect to the
compensation of our independent trustees as of December 31,
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
Name(1)
|
|
Paid in Cash ($)(2)
|
|
Share Awards ($)(3)
|
|
Total
|
|
Miles Berger
|
|
|
33,645
|
|
|
|
125,974
|
|
|
|
159,619
|
|
Thomas J. Crocker
|
|
|
30,104
|
|
|
|
125,974
|
|
|
|
156,078
|
|
Jack P. DeBoer
|
|
|
26,562
|
|
|
|
125,974
|
|
|
|
152,536
|
|
Glen R. Gilbert
|
|
|
33,645
|
|
|
|
125,974
|
|
|
|
159,619
|
|
C. Gerald Goldsmith
|
|
|
31,875
|
|
|
|
125,974
|
|
|
|
157,849
|
|
Robert Perlmutter
|
|
|
26,562
|
|
|
|
125,974
|
|
|
|
152,536
|
|
Rolf E. Ruhfus
|
|
|
26,562
|
|
|
|
125,974
|
|
|
|
152,536
|
|
Joel F. Zemans
|
|
|
26,562
|
|
|
|
125,974
|
|
|
|
152,536
|
|
|
|
|
(1) |
|
Mr. Fisher, our Chairman, President and Chief Executive
Officer, is not included in this table as he is an employee of
the Company and does not receive additional compensation for his
service as a trustee. All of the compensation paid to
Mr. Fisher for the services he provides to us is reflected
in the Summary Compensation Table. |
|
(2) |
|
Reflects cash payments of $37,500 to each of our independent
trustees as one-half of the annual trustees retainer fee,
as well as additional cash fees of (i) $10,000 to our lead
independent trustee (Mr. Berger), (ii) $10,000 to the
chairman of our Audit Committee (Mr. Gilbert),
(iii) $7,500 to the chairman of our Compensation Committee
(Mr. Goldsmith) and (iv) $5,000 to the chairman of our
Nominating and Corporate Governance Committee
(Mr. Crocker). For 2010, these annual amounts were prorated
from April 21, 2010, the date of completion of our initial
public offering (IPO), through December 31,
2010. See Trustee Compensation above. |
|
(3) |
|
Amounts reflect the full grant date fair value of restricted
common shares or common shares granted during 2010, calculated
in accordance with ASC 718. As part of our 2010
compensation plan, we granted (i) 5,000 restricted common
shares to each of our independent trustees in connection with
the completion of our initial public offering and
(ii) 1,513 common shares to each of our independent
trustees as one-half of the annual trustees retainer fee
prorated for the time served during 2010. There can be no
assurance that restricted shares will vest. See Trustee
Compensation above. |
Narrative
Disclosure to Trustee Compensation Table
Our compensation policies and practices for our independent
trustees are described above under Trustee
Compensation.
8
Shareholder
Communications to the Board
Shareholders may contact an individual Trustee, the Board as a
group, or a specified Board committee or group, including the
non-employee Trustees as a group, at the following address:
Corporate Secretary, Chatham Lodging Trust, 50 Cocoanut Row,
Suite 216, Palm Beach, FL 33480 Attn: Board of Trustees.
The Company will receive and process communications before
forwarding them to the addressee. Trustees generally will not be
forwarded shareholder communications that are primarily
commercial in nature, relate to improper or irrelevant topics,
or request general information about the Company.
Meeting
Attendance
During the Companys last fiscal year, the Companys
Board of Trustees met five times and the Boards Committees
met a total of six times. Each member of the Board attended 75%
or more of the Board meetings and meetings of the committees on
which he served. As set forth in our Corporate Governance
Guidelines, Trustees are invited and encouraged to attend
meetings of shareholders.
Leadership
Structure and Risk Oversight
Management is responsible for the
day-to-day
management of risks we face. The Board has overall
responsibility for overseeing risk management with a focus on
the more significant risks facing the Company. Our Audit
Committee oversees risk policies and processes related to our
financial statements, financial reporting processes and
liquidity risks, our Nominating and Corporate Governance
Committee oversees corporate governance risks and our
Compensation Committee oversees risks relating to remuneration
of our officers and employees. The Compensation Committee does
not believe that the compensation programs which are in place
give rise to any risk that is reasonably likely to have a
material adverse effect on us.
At each quarterly meeting of the Audit Committee, a portion of
the meeting is devoted to reviewing material credit risks, our
loan portfolio, status of foreclosure and similar proceedings,
status of the properties in our real estate portfolio and other
matters which might have a material adverse impact on current or
future operations, and, as required, the Audit Committee reviews
risks arising from related party transactions. In addition, at
each meeting of the Audit Committee, our Chief Financial
Officer, as well as the independent accounting firm reviewing or
auditing, as the case may be, our financial statements, reports
to the committee with respect to compliance by our employees
with our internal control policies in order to ascertain that no
failures of a material nature have occurred. This process
assists the Audit Committee in overseeing the risks related to
our financial statements and the financial reporting process. At
each meeting of the Board of Trustees, a portion of the meeting
is dedicated to reviewing and discussing significant risk issues
reviewed by the Audit Committee.
Mr. Fisher serves as both our Chairman and our Chief
Executive Officer. Mr. Berger has been appointed lead
independent trustee. We believe that it is in the best interests
of our shareholders for Mr. Fisher to serve as our Chairman
because of his unique insight into the Company as well as the
lodging industry and his excellent reputation among
institutional investors. We also believe that appointing an
independent trustee to preside over executive sessions of the
Board and providing the opportunity for all trustees to add
items to the agenda of meetings of the Board and its committees
mitigates the risk that having our Chief Executive Officer serve
as our Chairman may cause management to have undue influence on
our Board of Trustees. As lead independent trustee,
Mr. Berger presides at all meetings of the Board of
Trustees at which the Chairman of the Board is not present, has
the authority to call meetings of the independent trustees and
has such other duties as the Board of Trustees may determine
from time to time.
The Board takes an active and informed role in the
Companys risk management policies and strategies. At least
annually, the Companys executive officers who are
responsible for the Companys
day-to-day
risk management practices will present to the Board a
comprehensive report on the material risks to the Company,
including credit risk, liquidity risk and operational risk. At
that time, the management team will also review with the Board
of Trustees the Companys risk mitigation policies and
strategies specific to each risk that is identified. If
necessary, the Board may delegate specific risk management tasks
to management or a committee. Throughout the year, management
monitors the Companys risk profile and, on a regular
basis,
9
updates the Board as new material risks are identified or the
aspects of a risk previously presented to the Board materially
change. The Audit Committee also actively monitors risks to the
Company throughout the year, and with the aid of management,
identifies any additional risks that need to be elevated for the
full Boards consideration.
PRINCIPAL
SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of common shares as of March 31, 2011
by (i) each of our trustees, (ii) each of our
executive officers, (iii) each holder of 5% or more of each
class of our shares and (iv) all of our trustees and
executive officers as a group. Unless otherwise indicated, all
shares are owned directly and the indicated person has sole
voting and investment power. In accordance with SEC rules, each
listed persons beneficial ownership includes:
|
|
|
|
|
all shares the person actually owns beneficially or of record;
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|
|
|
all shares over which the person has or shares voting or
dispositive control (such as in the capacity as a general
partner of an investment fund); and
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|
|
all shares the person has the right to acquire within
60 days (such as restricted common shares that are
scheduled to vest within 60 days).
|
Unless otherwise indicated, the address of each named person is
50 Cocoanut Row, Suite 216, Palm Beach, Florida 33480. No
shares beneficially owned by any executive officer or trustee
have been pledged as security.
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|
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|
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|
|
Common Shares
|
|
|
Name of Beneficial Owner
|
|
Beneficially Owned(1)
|
|
Percent of Class
|
|
Wells Fargo and Company
|
|
|
1,062,136
|
(2)
|
|
|
7.69
|
%
|
Prudential Financial, Inc.
|
|
|
784,420
|
(3)
|
|
|
5.68
|
%
|
Jennison Associates LLC
|
|
|
756,820
|
(4)
|
|
|
5.48
|
%
|
Robeco Investment Management, Inc.
|
|
|
753,675
|
(5)
|
|
|
5.45
|
%
|
Moab Capital Partners LLC
|
|
|
695,879
|
(6)
|
|
|
5.03
|
%
|
Jeffrey H. Fisher
|
|
|
528,950
|
(7)
|
|
|
3.83
|
%
|
Peter Willis
|
|
|
11,650
|
(8)
|
|
|
|
*
|
Dennis M. Craven
|
|
|
11,650
|
(9)
|
|
|
|
*
|
Miles Berger
|
|
|
9,013
|
|
|
|
|
*
|
Thomas J. Crocker
|
|
|
6,513
|
|
|
|
|
*
|
Jack P. DeBoer
|
|
|
10,013
|
|
|
|
|
*
|
Glen R. Gilbert
|
|
|
6,513
|
|
|
|
|
*
|
C. Gerald Goldsmith
|
|
|
6,513
|
|
|
|
|
*
|
Robert Perlmutter
|
|
|
9,013
|
|
|
|
|
*
|
Rolf E. Ruhfus
|
|
|
6,513
|
|
|
|
|
*
|
Joel F. Zemans
|
|
|
9,013
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
All executive officers and trustees as a group
|
|
|
615,354
|
|
|
|
4.45
|
%
|
|
|
|
* |
|
Represents less than 1% of our common shares outstanding. |
|
(1) |
|
The number of common shares beneficially owned is reported on
the basis of regulations of the SEC governing the determination
of beneficial ownership of securities. The number of common
shares held by the shareholders who filed statements on
Schedule 13G as described in other footnotes to this table
is current as of the date of the filing of their Schedules 13G.
The number of common shares held by our trustees and executive
officers, and all of the percentages shown in this table, are
calculated as of March 31, 2011, based on
13,820,854 shares outstanding. |
10
|
|
|
(2) |
|
The number of common shares in the table above and the
information in this footnote are based on a statement on
Schedule 13G/A jointly filed with the SEC on
January 20, 2011 by Wells Fargo and Company, a Delaware
corporation and parent holding company, or Wells Fargo, and the
following subsidiaries: Peregrine Capital Management, Inc.,
Wells Capital Management Incorporated and Wells Fargo Funds
Management, LLC, each of which is classified as an investment
adviser registered under Section 203 of the Investment
Advisers Act of 1940, and Wells Fargo Bank, N.A., classified as
a bank in accordance with
Regulation 13d-1(b)(1)(ii)(B).
Wells Fargo has sole voting power over 945,853 shares,
shared voting power over 825 shares, sole dispositive power
over 546,811 shares and shared dispositive power over no
shares. Wells Fargo has its principal business office at: 420
Montgomery Street, San Francisco, California 94104. |
|
(3) |
|
The number of common shares in the table above and the
information in this footnote are based on a statement on
Schedule 13G/A filed with the SEC on January 31, 2011
by Prudential Financial, Inc., a New Jersey corporation and
parent holding company, or Prudential. Prudential has sole
voting power over 108,752 shares, shared voting power over
26,100 shares, sole dispositive power over
108,752 shares and shared dispositive power over
675,668 shares. Prudential has its principal business
office at: 751 Broad Street, Newark, New Jersey
07102-3777. |
|
(4) |
|
The number of common shares in the table above and the
information in this footnote are based on a statement on
Schedule 13G/A filed with the SEC on February 11, 2011
by Jennison Associates LLC, a Delaware limited liability
company, or Jennison. Jennison has sole voting power over
756,820 shares, shared voting power over no shares, sole
dispositive power over no shares and shared dispositive power
over 756,820 shares. Prudential Financial, Inc.
(Prudential) indirectly owns 100% of the equity
interests of Jennison. As a result, Prudential may be deemed to
have the power to exercise or to direct the exercise of such
voting and/or dispositive power that Jennison may have with
respect to the Companys common stock held by the
portfolios managed by Jennison. Jennison does not file jointly
with Prudential, as such, shares of the Companys common
stock reported on Jennisons 13G may be included in the
shares reported on the 13G filed by Prudential. Jennison has its
principal business office at: 466 Lexington Avenue, New York,
New York 10017. |
|
(5) |
|
The number of common shares in the table above and the
information in this footnote are based on a statement on
Schedule 13G/A filed with the SEC on February 28, 2011
by Robeco Investment Management, Inc, a Delaware corporation or
Robeco. Robeco has sole voting power over 621,855 shares,
shared voting power over 21,860 shares, sole dispositive
power over 753,675 shares, and shared dispositive power
over no shares. Robeco has its principal business office at: 909
Third Ave, New York, New York 10022. |
|
(6) |
|
The number of common shares in the table above and the
information in this footnote are based on a statement on
Schedule 13G filed with the SEC on March 28, 2011 by
Moab Capital Partners, LLC, a Delaware limited liability
company, Moab Partners, L.P., a Delaware limited partnership,
Mr. Michael M. Rothenberg and Mr. David A. Sackler,
or, collectively, Moab. Moab has sole voting power and sole
dispositive power over 695,879 shares and shared voting
power and shared dispositive power over no shares. Moab has its
principal business office at: 15 East 62nd Street, New York, New
York 10065. |
|
(7) |
|
This amount includes 100 common shares owned by Jeffrey Fisher
Marital Trust. Mr. Fisher disclaims beneficial ownership of
those shares. This amount does not include 198,940 long-term
incentive plan (LTIP) units held by Mr. Fisher. |
|
(8) |
|
This amount does not include 32,585 LTIP units held by
Mr. Willis. |
|
(9) |
|
This amount does not include 26,250 LTIP units held by
Mr. Craven. |
11
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
We pay base salaries and annual bonuses and make grants of
awards under our Equity Incentive Plan to certain of our
officers. Awards under our Equity Incentive Plan are granted to
provide performance and retention incentives to these
individuals based on factors such as the desire to retain such
officers services over the long-term, aligning such
officers interest with those of our shareholders,
incentivizing such officers over the near-, medium- and
long-term, and rewarding such officers for exceptional
performance. In addition, our Compensation Committee may
determine to make awards to new executive officers to help
attract them to our company.
Our compensation program for our named executive officers,
Messrs. Fisher, Willis and Craven (and, prior to the
termination of his employment, Mr. Julio Morales, our
former Chief Financial Officer), consists of four key elements:
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|
|
|
Cash compensation, in the form of base salaries and annual cash
bonus awards;
|
|
|
|
Long-term incentives, in the form of restricted share awards and
awards of long-term incentive plan (LTIP) units that
vest over time;
|
|
|
|
Health and welfare benefits; and
|
|
|
|
Severance arrangements under the executives employment
agreements.
|
Elements
of Named Executive Officer Compensation
Annual base salary. Base salary is designed to
compensate our named executive officers at a fixed level of
compensation that serves as a retention tool throughout the
executives career. The initial base salaries of
Messrs. Fisher, Willis and Morales were determined by
Messrs. Fisher and Willis prior to completion of our IPO
while they served as our sole officers and Mr. Fisher was
our sole trustee, with the advice and recommendations of
independent compensation consultant, The Schonbraun McCann Group
(the Compensation Consultant), and were ratified by
our Compensation Committee following the completion of our IPO.
The Compensation Consultant prepared a report recommending
compensation levels as compared with a peer group of
approximately thirteen companies, primarily hotel REITs whose
equity market capitalizations were similar to the then
anticipated market capitalization of the Company. The base
salary of Mr. Craven was determined by our Compensation
Committee in connection with the commencement of
Mr. Cravens employment in September 2010. In
determining whether to increase base salaries for our named
executive officers in any subsequent year, the Compensation
Committee will consider each executives role and
responsibility, unique skills, future potential with our
company, salary levels for similar positions at peer companies,
internal pay equity and such other factors as the Compensation
Committee may determine to be relevant.
Under their employment agreements, Messrs. Fisher, Willis
and Craven were entitled to receive initial annual base salaries
for 2010 of $300,000, $285,000, $285,000, respectively, payable
in approximately equal bi-weekly installments. Base salary
amounts paid to Messrs. Fisher and Willis for 2010 were
prorated from the date of completion of our IPO in April 2010.
Mr. Cravens base salary amount for 2010 was prorated
from the date of commencement of his employment in September
2010. Mr. Moraless base salary amount for 2010 was
prorated from the date of completion of our IPO until the date
of termination of his employment in September 2010. For 2011,
the annual base salaries for Messrs. Fisher, Willis and
Craven are set at the same, non-prorated annual base salaries as
received in 2010; however, the Compensation Committee may at its
election determine to adjust the base salaries in the future.
Annual cash bonus. Annual cash bonuses are
designed to provide incentives to our named executive officers
at a variable level of compensation based on such
individuals performance. In connection with our annual
cash bonus program, our Compensation Committee will determine
annual performance criteria that are flexible and that change
with the needs of our business. Each year, our annual cash bonus
plan will be designed to reward the achievement of specific,
pre-established financial and operational objectives. Pursuant
12
to our initial growth strategy following the successful
completion of our IPO, all of our named executive officers
agreed not to accept any discretionary cash bonus for 2010.
Restricted Share and LTIP Unit Awards. We have
provided, and expect to provide in the future, awards pursuant
to our Equity Incentive Plan. We made grants of time-based
restricted shares to each of Messrs. Fisher, Willis and
Morales of 15,650 shares, 10,450 shares and
10,450 shares, respectively, upon completion of our IPO.
The number of shares granted, and the type of award made, were
determined by Messrs. Fisher and Willis, with the
recommendation of the Compensation Consultant, prior to
completion of our IPO while they served as our sole officers and
Mr. Fisher was our sole trustee, and were subsequently
ratified by our Compensation Committee following the completion
of our IPO. 7,200 of Mr. Moraless restricted shares
vested upon termination of his employment and the remaining
shares in Mr. Moraless restricted share award were
forfeited. We also made a grant of 10,450 time-based restricted
shares to Mr. Craven in connection with the commencement of
his employment in September 2010, which was approved by our
Compensation Committee at the time of his appointment. With the
exception of Mr. Moraless restricted share award,
each restricted share award vests in substantially equal
installments on each of the first, second and third
anniversaries of the grant date.
We made grants of time-based LTIP units to each of
Messrs. Fisher, Willis and Morales of 198,940 LTIP units,
32,585 LTIP units and 15,435 LTIP units, respectively, upon
completion of our IPO. The number of LTIP units granted, and the
type of award made, were determined by Messrs. Fisher and
Willis, with the recommendation of the Compensation Consultant,
prior to completion of our IPO while they served as our sole
officers and Mr. Fisher was our sole trustee, and were
subsequently ratified by our Compensation Committee following
the completion of our IPO. Mr. Moraless LTIP unit
award was forfeited upon termination of his employment. We also
made a grant of 26,250 time-based LTIP units to Mr. Craven
in connection with the commencement of his employment in
September 2010, which was approved by our Compensation Committee
at the time of his appointment. With the exception of
Mr. Moraless LTIP unit award, each LTIP unit award
vests in substantially equal installments on each of the first
through fifth anniversaries of the grant date.
The time-based restricted share awards were designed to foster
equity ownership by our named executive officers in our company
and to align their interests with the long-term interests of our
shareholders while also attracting and retaining key talent.
LTIP unit awards are tied to the performance of our company and
were designed to provide these key executives, who are primarily
responsible for our growth and operations, with incentives to
focus on long-term goals and enhancing shareholder value.
In determining future awards under our Equity Incentive Plan,
our Compensation Committee will take into account, among other
things, the companys overall financial performance, the
contributions of each of our named executive officers, the
long-term equity incentive compensation of officers in similar
positions at peer companies, internal pay equity and such other
factors as the Compensation Committee may determine to be
relevant.
Retirement savings opportunities. We have
established and plan to maintain a retirement savings plan under
section 401(k) of the Code. All eligible employees are able
to participate in our 401(k) Retirement Savings Plan, or 401(k)
Plan, which allows such employees to defer a portion of their
compensation, within prescribed limits, on a pre-tax basis
through contributions to the 401(k) Plan. Our 401(k) Plan is
intended to help our employees save a portion of their cash
compensation for retirement in a tax efficient manner. We match
employees annual contributions, within prescribed limits,
dollar for dollar up to the first 3% of each employees
compensation contributed and 50% of each employees
contributions above such 3% threshold, up to 5% of such
employees compensation. The employee matching
contributions vest immediately to the employee.
Health and welfare benefits. We provide a
competitive benefits package to all full-time employees, which
includes health and welfare benefits, such as medical, dental,
disability insurance and life insurance benefits. The plans
under which these benefits are offered do not discriminate in
scope, terms or operation in favor of officers and trustees and
are available to all full-time employees.
13
Post-termination pay. As described more fully
under Employment Arrangements and Potential
Payments upon Termination or Change in Control, we have
entered into employment agreements with each of our named
executive officers that provide the officers with compensation
if they are terminated without cause, they leave the
company with good reason (each as defined in the
applicable employment agreement) or their employment terminates
in certain circumstances following a change in control. We
believe these common protections promote our ability to attract
and retain management and assure us that our executive officers
will continue to be dedicated and available to provide objective
advice and counsel notwithstanding the possibility, threat or
occurrence of a change in their circumstances or in the control
of our company.
Summary
Compensation Table
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified Deferred
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
Share
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Principal Position
|
|
Year
|
|
Base Salary(1)
|
|
Bonus(2)
|
|
Awards(3)(4)
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
|
Jeffrey H. Fisher
|
|
|
2010
|
|
|
$
|
209,589
|
|
|
|
|
|
|
$
|
3,315,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,524,657
|
|
Chairman, President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Willis
|
|
|
2010
|
|
|
|
199,110
|
|
|
|
|
|
|
|
691,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
890,837
|
|
Executive Vice President & Chief Investment Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis M. Craven
|
|
|
2010
|
|
|
|
88,233
|
|
|
|
|
|
|
|
574,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
663,000
|
|
Executive Vice President & Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julio E. Morales(5)
|
|
|
2010
|
|
|
|
110,877
|
|
|
|
|
|
|
|
431,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
542,267
|
|
Former Executive Vice President & Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts represent each named executive officers annual
base salary, prorated to reflect partial year service.
Mr. Fisher and Mr. Willis received a pro rata portion
of their 2010 base salaries ($300,000 and $285,000,
respectively) for the period from the completion of our IPO,
April 21, 2010 through December 31, 2010.
Mr. Craven received a pro rata portion of his 2010 base
salary ($285,000) for the period from September 9, 2010,
the commencement date of his employment, through
December 31, 2010. Mr. Morales received a pro rata
portion of his 2010 base salary ($285,000) for the period from
completion of our IPO through September 9, 2010, the date
of termination of his employment. |
|
(2) |
|
Any bonus awards are determined at the sole discretion of our
Compensation Committee and our Board of Trustees based on our
implementation of our business plan and such other factors as
the Compensation Committee and the Board may deem appropriate.
All of our named executive officers agreed not to accept any
cash bonuses for 2010 as part of their initial commitment to the
Company. |
|
(3) |
|
Reflects restricted share awards in 2010 to Messrs. Fisher,
Willis, Morales and Craven pursuant to our Equity Incentive Plan
as part of our 2010 compensation program. The restricted share
awards were 15,650 shares for Mr. Fisher, 10,450 for
Mr. Willis, 10,450 for Mr. Morales and 10,450 for
Mr. Craven. All restricted share awards vest ratably over
the first three anniversaries of the date of grant other than
Mr. Moraless, of which 7,200 shares vested upon
termination of his employment and the rest of which were
forfeited. Amounts in this column represent the aggregate grant
date fair value of the restricted share awards. Amounts were
calculated in accordance with Accounting Standards Codification
Topic 718, Compensation Stock Compensation,
or ASC Topic 718. |
|
(4) |
|
Amounts also account for the grant of LTIP units to
Messrs. Fisher, Willis, Morales and Craven under our Equity
Incentive Plan. Messrs. Fisher, Willis, and Morales were
awarded 198,940, 32,585, and 15,435 LTIP units and 26,250 LTIP
units, respectively, upon completion of the IPO. Mr. Craven
was awarded 26,250 LTIP Units upon commencement. All LTIP unit
awards vest ratably over the first five anniversaries of the
date of grant other than Mr. Moraless, which was
forfeited upon termination of his employment. For purposes of
this table and the pro forma financial information of Chatham
Lodging Trust beginning on
page F-3,
we estimated, under the principles of GAAP, that the discounted
values of the LTIP unit awards |
14
|
|
|
|
|
are $3,019,909 to Mr. Fisher, $494,640 to Mr. Willis,
$234,303 to Mr. Morales and $398,475 to Mr. Craven.
The compensation reported in the table related to the LTIP
grants reflects the aggregate grant date fair value of the LTIP
units, calculated in accordance with ASC Topic 718. To determine
the discounted value of the LTIP unit awards, we considered the
inherent uncertainty that the LTIP units will reach parity with
the other common partnership common units, appropriateness of
discounts for illiquidity, expectations for future dividends and
various other data available to us as of the date of this grant. |
|
(5) |
|
Mr. Craven replaced Mr. Morales as our Executive Vice
President & Chief Financial Officer on
September 9, 2010. |
Grants of
Plan-Based Awards
The following table sets forth information with respect to
plan-based equity awards granted in 2010 to our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Share
|
|
|
Name
|
|
Grant Date
|
|
Awards or Units
|
|
Grant Date Fair Value
|
|
Jeffrey H. Fisher
|
|
April 23, 2010
|
|
|
198,940
|
(1)
|
|
$
|
3,019,909
|
(4)
|
|
|
May 20, 2010
|
|
|
15,650
|
(2)
|
|
$
|
295,159
|
(5)
|
Peter Willis
|
|
April 23, 2010
|
|
|
32,585
|
(1)
|
|
$
|
494,640
|
(4)
|
|
|
May 20, 2010
|
|
|
10,450
|
(2)
|
|
$
|
197,087
|
(5)
|
Julio E. Morales
|
|
April 23, 2010
|
|
|
15,435
|
(1)
|
|
$
|
234,303
|
(4)
|
|
|
May 20, 2010
|
|
|
10,450
|
(2)
|
|
$
|
197,087
|
(5)
|
Dennis M. Craven
|
|
September 9, 2010
|
|
|
26,250
|
(1)
|
|
$
|
398,475
|
(4)
|
|
|
September 9, 2010
|
|
|
10,450
|
(3)
|
|
$
|
176,292
|
(5)
|
|
|
|
(1) |
|
Amounts reflect the grant of LTIP unit awards to the executive
under our Equity Incentive Plan in connection with the
completion of our IPO or, in the case of Mr. Craven, in
connection with the commencement of his employment. Each LTIP
unit award vests ratably on each of the first five anniversaries
of the date of grant other than Mr. Moraless, which
were forfeited upon termination of his employment in September
2010. |
|
(2) |
|
Represents restricted common shares issued to the executive
pursuant to our Equity Incentive Plan following the first
meeting of our Compensation Committee after completion of our
IPO. Each restricted share award vests ratably on the first
three anniversaries of the date of grant other than
Mr. Moraless, of which 7,200 shares were vested
upon termination of his employment and the rest of which were
forfeited and cancelled. |
|
(3) |
|
Represents restricted common shares issued to Mr. Craven
pursuant to our Equity Incentive Plan in connection with the
commencement of his employment. Mr. Cravens
restricted share award vests ratably on the first three
anniversaries of the date of grant. |
|
(4) |
|
The grant date fair value of the LTIP unit awards was calculated
in accordance with ASC Topic 718. To determine the discounted
value of the LTIP unit awards, we considered the inherent
uncertainty that the LTIP units will reach parity with the other
common partnership common units, appropriateness of discounts
for illiquidity, expectations for future dividends and various
other data available to us as of the date of this grant. |
|
(5) |
|
Represents the aggregate grant date fair value of the restricted
share awards. Amounts were calculated in accordance with ASC
Topic 718. |
15
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information with respect to
outstanding equity awards held by the named executive officers
as of December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares or Units That
|
|
Market Value of Shares That
|
Name
|
|
Have Not Vested
|
|
Have Not Vested(4)
|
|
Jeffrey H. Fisher
|
|
|
198,940
|
(2)
|
|
$
|
3,431,715
|
|
|
|
|
15,650
|
(3)
|
|
$
|
269,963
|
|
Peter Willis
|
|
|
32,585
|
(2)
|
|
$
|
562,092
|
|
|
|
|
10,450
|
(3)
|
|
$
|
180,263
|
|
Julio E. Morales(1)
|
|
|
|
|
|
|
|
|
Dennis M. Craven
|
|
|
26,250
|
(2)
|
|
$
|
452,813
|
|
|
|
|
10,450
|
(3)
|
|
$
|
180,263
|
|
|
|
|
(1) |
|
Mr. Morales did not hold outstanding equity awards as of
December 31, 2010. |
|
(2) |
|
Reflects the grant of LTIP unit awards to the executive under
our Equity Incentive Plan upon completion of our IPO or, in the
case of Mr. Craven, in connection with the commencement of
his employment. The awards of LTIP units vest ratably on each of
the first five anniversaries of the date of grant:
April 23, 2011, April 23, 2012, April 23, 2013,
April 23, 2014 and April 23, 2015, in the case of
Messrs. Fisher and Willis; and on September 9, 2011,
September 9, 2012, September 9, 2013,
September 9, 2014 and September 9, 2015, in the case
of Mr. Craven. |
|
(3) |
|
Reflects restricted common shares issued to the executive
pursuant to our Equity Incentive Plan following the first
meeting of our Board of Trustees after completion of our IPO or,
in the case of Mr. Craven, at the time of commencement of
his employment. The awards of restricted common shares vest
ratably on each of the first three anniversaries of the date of
grant: May 20, 2011, May 20, 2012 and May 20,
2013, in the case of Messrs. Fisher and Willis; and on
September 9, 2011, September 9, 2012 and
September 9, 2013, in the case of Mr. Craven. |
|
(4) |
|
Unless and until LTIP units reach parity with common shares, the
value of LTIP units can only be estimated. However, for purposes
of calculating the market value of LTIP units and restricted
common shares that have not vested, the market value per
unvested LTIP unit and restricted common share is assumed to be
$17.25, the closing market price per common share at the end of
the last completed fiscal year, December 31, 2010. This
table further assumes that the LTIP units had reached parity
with our common shares on December 31, 2010. However, as of
December 31, 2010, the LTIP units had not reached parity
with our common shares. |
Option
Exercises and Shares Vested
The following table summarizes vesting of common shares
applicable to our named executive officers during the year ended
December 31, 2010. None of the named executive officers
exercised any options during 2010.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
|
Acquired on Vesting
|
|
Value Realized on
|
Name
|
|
(#)
|
|
Vesting ($)(1)
|
|
Jeffrey H. Fisher
|
|
|
|
|
|
|
|
|
Peter Willis
|
|
|
|
|
|
|
|
|
Julio E. Morales
|
|
|
7,200
|
|
|
|
121,032
|
|
Dennis M. Craven
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount shown is based on the fair market value of our common
shares ($16.81) on the applicable vesting date
(September 9, 2010). |
16
Equity
Incentive Plan
Prior to the completion of our IPO, our Board of Trustees
adopted, and our sole shareholder at the time approved, our
Equity Incentive Plan to attract and retain independent
trustees, executive officers and other key employees and service
providers, including officers and employees of our affiliates.
The Equity Incentive Plan provides for the grant of options to
purchase common shares, share awards, share appreciation rights,
performance units and other equity-based awards.
Administration
of the Equity Incentive Plan
The Equity Incentive Plan is administered by our Compensation
Committee, which is authorized to approve all terms of awards
under the Equity Incentive Plan. Our Compensation Committee may
also approve who receives grants under the Equity Incentive Plan
and the number of common shares subject to the grant.
Eligibility
All of our employees and employees of our subsidiaries and
affiliates, including our operating partnership, are eligible to
receive grants under the Equity Incentive Plan. In addition, our
independent trustees and individuals who perform services for us
and our subsidiaries and affiliates, including employees of our
operating partnership, may receive grants under the Equity
Incentive Plan.
Share
Authorization
The number of common shares that may be issued under the Equity
Incentive Plan is 565,359. In connection with share splits,
dividends, recapitalizations and certain other events, our board
will make adjustments that it deems appropriate in the aggregate
number of common shares that may be issued under the Equity
Incentive Plan and the terms of outstanding awards.
If any options or share appreciation rights terminate, expire or
are canceled, forfeited, exchanged or surrendered without having
been exercised or paid or if any share awards, performance units
or other equity-based awards are forfeited, the common shares
subject to such awards will again be available for purposes of
the Equity Incentive Plan.
Options
The Equity Incentive Plan authorizes our Compensation Committee
to grant incentive stock options (under Section 422 of the
Code) and options that do not qualify as incentive share
options. The exercise price of each option will be determined by
the Compensation Committee, provided that the price cannot be
less than 100% of the fair market value of the common shares on
the date on which the option is granted (or 110% of the
shares fair market value on the grant date in the case of
an incentive share option granted to an individual who is a
ten percent shareholder under Sections 422 and
424 of the Code). The exercise price for any option is generally
payable (i) in cash, (ii) by certified check,
(iii) by the surrender of common shares (or attestation of
ownership of common shares) with an aggregate fair market value
on the date on which the option is exercised, equal to the
exercise price, or (iv) by payment through a broker in
accordance with procedures established by the Federal Reserve
Board. The term of an option cannot exceed ten years from the
date of grant (or five years in the case of an incentive share
option granted to a ten percent shareholder).
Share
Awards
The Equity Incentive Plan also provides for the grant of share
awards. A share award is an award of common shares that may be
subject to restrictions on transferability and other
restrictions as our Compensation Committee determines in its
sole discretion on the date of grant. The restrictions, if any,
may lapse over a specified period of time or through the
satisfaction of conditions, in installments or otherwise, as our
Compensation Committee may determine. A participant who receives
a share award will have all of the rights of a shareholder as to
those shares, including, without limitation, the right to vote
and the right to receive dividends or distributions on the
shares. During the period, if any, when share awards are
non-transferable or
17
forfeitable, (i) a participant is prohibited from selling,
transferring, pledging, exchanging, hypothecating or otherwise
disposing of his or her share awards, (ii) the Company will
retain custody of the certificates and (iii) a participant
must deliver a share power to the company for each share award.
At the first meeting of our Board of Trustees following the
completion of our IPO, our Compensation Committee approved the
grant of an aggregate of 36,550 restricted shares to
Mr. Fisher, Mr. Willis and Mr. Morales, our
former chief financial officer. Mr. Craven was granted
10,450 restricted shares at the commencement of his employment
on September 9, 2010. All of these restricted share awards
will vest ratably on the first three anniversaries of the date
of grant other than Mr. Moraless, of which
7,200 shares vested upon termination of his employment and
the rest of which were forfeited.
Share
Appreciation Rights
The Equity Incentive Plan authorizes our Compensation Committee
to grant share appreciation rights that provide the recipient
with the right to receive, upon exercise of the share
appreciation right, cash, common shares or a combination of the
two. The amount that the recipient will receive upon exercise of
the share appreciation right generally will equal the excess of
the fair market value of the common shares on the date of
exercise over the shares fair market value on the date of
grant. Share appreciation rights will become exercisable in
accordance with terms determined by our Compensation Committee.
Share appreciation rights may be granted in tandem with an
option grant or as independents grants. The term of a share
appreciation right cannot exceed ten years from the date of
grant or five years in the case of a share appreciation right
granted in tandem with an incentive share option awarded to a
ten percent shareholder.
Performance
Units
The Equity Incentive Plan also authorizes our Compensation
Committee to grant performance units. Performance units
represent the participants right to receive an amount,
based on the value of the common shares, if performance goals
established by the Compensation Committee are met. Our
Compensation Committee will determine the applicable performance
period, the performance goals and such other conditions that
apply to the performance unit. Performance goals may relate to
our financial performance or the financial performance of our
operating partnership, the participants performance or
such other criteria determined by the Compensation Committee. If
the performance goals are met, performance units will be paid in
cash, our common shares or a combination thereof.
Other
Equity-Based Awards
Our Compensation Committee may grant other types of share-based
awards as other equity-based awards under the Equity Incentive
Plan, including Long-Term Incentive Plan, or LTIP, units. Other
equity-based awards are payable in cash, our common shares or
other equity, or a combination thereof, determined by the
Compensation Committee. The terms and conditions of other
equity-based awards are determined by the Compensation Committee.
LTIP units are a special class of partnership interests in our
operating partnership. Each LTIP unit awarded is deemed
equivalent to an award of one common share under the Equity
Incentive Plan, reducing availability for other equity awards on
a
one-for-one
basis. We will not receive a tax deduction for the value of any
LTIP units granted to our employees. The vesting period for any
LTIP units, if any, will be determined at the time of issuance.
LTIP units, whether vested or not, receive the same quarterly
per unit profit distributions as units of our operating
partnership, which profit distribution per LTIP unit will
generally equal per share dividends on our common shares. This
treatment with respect to quarterly distributions is similar to
the treatment of our restricted share awards, which generally
receive full dividends whether vested or not. Initially, LTIP
units do not have full parity with operating partnership common
units with respect to liquidating distributions. Under the terms
of the LTIP units, our operating partnership will revalue its
assets upon the occurrence of certain specified events, and any
increase in valuation from the time of grant until such event
will be allocated first to the holders of LTIP units to equalize
the capital accounts of such holders with the capital accounts
of operating partnership common unit holders. Upon equalization
of the capital accounts of
18
the holders of LTIP units with the other holders of operating
partnership common units, the LTIP units will achieve full
parity with operating partnership common units for all purposes,
including with respect to liquidating distributions. If such
parity is reached, vested LTIP units may be converted into an
equal number of operating partnership common units at any time,
and thereafter will have all the rights of operating partnership
common units, including redemption rights. However, there are
circumstances under which such parity would not be reached.
Until and unless such parity is reached, the value that an
executive officer will realize for a given number of vested LTIP
units will be less than the value of an equal number of our
common shares.
Upon completion of our IPO, our operating partnership issued an
aggregate of 246,960 LTIP units to certain of our officers. The
15,435 LTIP units granted to Mr. Morales at the completion
of our IPO were forfeited upon termination of his employment. On
September 9, 2010, our operating partnership granted 26,250
LTIP units to Mr. Craven in connection with the
commencement of his employment with our company. The LTIP units
granted to Messrs. Fisher, Willis and Craven will vest
ratably over the first five anniversaries of the date of grant.
See Our Operating Partnership and the Partnership
Agreement for a further description of the rights of
limited partners in our operating partnership.
Dividend
Equivalents
Our Compensation Committee may grant dividend equivalents in
connection with the grant of performance units and other
equity-based awards. Dividend equivalents may be paid currently
or accrued as contingent cash obligations (in which case they
will be deemed to have been invested in common shares) and may
be payable in cash, common shares or a combination of the two.
Our Compensation Committee will determine the terms of any
dividend equivalents.
Change
in Control
If we experience a change in control, the Compensation Committee
may, at its discretion, provide that all outstanding options,
share appreciation rights, share awards, performance units, or
other equity based awards that are not exercised prior to the
change in control will be assumed by the surviving entity, or
will be replaced by a comparable substitute award of
substantially equal value granted by the surviving entity. The
Compensation Committee may also provide that (i) all
outstanding options and share appreciation rights will be fully
exercisable on the change in control, (ii) restrictions and
conditions on outstanding share awards will lapse upon the
change in control and (iii) performance units or other
equity-based awards will become earned in their entirety. The
Compensation Committee may also provide that participants must
surrender their outstanding options and share appreciation
rights, share awards, performance units, and other equity based
awards in exchange for a payment, in cash or our common shares
or other securities or consideration received by shareholders in
the change in control transaction, equal to the value received
by shareholders in the change in control transaction (or, in the
case of options and share appreciation rights, the amount by
which that per share transaction value exceeds the per share
exercise price).
In summary, a change of control under the Equity Incentive Plan
occurs if:
|
|
|
|
|
a person, entity or affiliated group (with certain exceptions)
acquires, in a transaction or series of transactions, more than
50% of the total combined voting power of our outstanding
securities or common shares;
|
|
|
|
we merge into another entity unless the holders of our voting
shares immediately prior to the merger have more than 50% of the
combined voting power of the securities in the merged entity or
its parent;
|
|
|
|
we sell or dispose of all or substantially all of our assets;
|
|
|
|
we are liquidated or dissolved; or
|
|
|
|
during any period of two consecutive years individuals who, at
the beginning of such period, constitute our Board of Trustees
together with any new trustees (other than individuals who
become trustees in
|
19
|
|
|
|
|
connection with certain transactions or election contests) cease
for any reason to constitute a majority of our Board of Trustees.
|
Amendment;
Termination
Our Board of Trustees may amend or terminate the Equity
Incentive Plan at any time, provided that no amendment may
adversely impair the benefits of participants with outstanding
awards. Our shareholders must approve any amendment if such
approval is required under applicable law or stock exchange
requirements. Our shareholders also must approve any amendment
that materially increases the benefits accruing to participants
under the Equity Incentive Plan, materially increases the
aggregate number of common shares that may be issued under the
Equity Incentive Plan or materially modifies the requirements as
to eligibility for participation in the Equity Incentive Plan.
Unless terminated sooner by our Board of Trustees or extended
with shareholder approval, the Equity Incentive Plan will
terminate on the day before the tenth anniversary of the date
our Board of Trustees adopted the Equity Incentive Plan.
Employment
Arrangements
Jeffrey H. Fisher. Our employment agreement
with Mr. Fisher has an initial term of three years and will
renew for one-year terms thereafter unless terminated by written
notice delivered at least 30 days before the end of the
then-current term. The employment agreement provides for an
annual base salary to Mr. Fisher of $300,000, subject to
increase in the discretion of the Board or its Compensation
Committee.
Under his employment agreement, Mr. Fisher is eligible to
earn an annual cash bonus at the discretion of the Compensation
Committee or to the extent that prescribed individual and
corporate goals established by the Committee are achieved.
Mr. Fishers employment agreement entitles him to
customary fringe benefits, including vacation and the right to
participate in any other benefits or plans in which other
executive-level employees participate (including but not limited
to retirement, pension, profit-sharing, insurance (including
life insurance) or hospital plans).
Mr. Fishers employment agreement provides for certain
payments in the event that his employment ends upon termination
by us for cause, his resignation without good
reason (as defined below), his death or disability or any
reason other than a termination by us without cause
or his resignation with good reason. The agreement
defines cause as (1) a failure to perform a
material duty or a material breach of an obligation set forth in
Mr. Fishers employment agreement or a breach of a
material and written policy other than by reason of mental or
physical illness or injury, (2) a breach of
Mr. Fishers fiduciary duties, (3) conduct that
demonstrably and materially injures us monetarily or otherwise
or (4) a conviction of, or plea of nolo contendere to, a
felony or crime involving moral turpitude or fraud or dishonesty
involving our assets, and that in each case is not cured, to the
Boards reasonable satisfaction, within 30 days after
written notice. In any such event, Mr. Fishers
employment agreement provides for the payment to him of any
earned but unpaid compensation up to the date of his termination
and any benefits due to him under the terms of any of our
employee benefit plans.
Mr. Fishers employment agreement provides for certain
severance payments in the event that his employment ends upon
termination by us without cause or his resignation
for good reason. The agreement defines good
reason as (1) our material breach of the terms of
Mr. Fishers employment agreement or a direction from
the Board that he act or refrain from acting in a manner
unlawful or contrary to a material and written policy,
(2) a material diminution in Mr. Fishers duties,
functions and responsibilities without his consent or our
preventing him from fulfilling or exercising his material
duties, functions and responsibilities without his consent,
(3) a material reduction in Mr. Fishers base
salary or annual bonus opportunity or (4) a requirement
that Mr. Fisher relocate more than 50 miles from the
current location of his principal office without his consent, in
each case provided that Mr. Fisher has given written notice
to the Board within 30 days after he knows of the
circumstances constituting good reason, the
circumstances constituting good reason are not cured
within 30 days of such notice and Mr. Fisher resigns
within 30 days after the expiration of the cure period. In
any such event, Mr. Fisher is entitled to receive any
earned but unpaid compensation up to the
20
date of his termination and any benefits due to him under the
terms of our employee benefit plans. If Mr. Fisher signs a
general release of claims, then any outstanding options,
restricted shares and other equity awards shall be vested and
exercisable as of the date of termination and outstanding
options shall remain exercisable thereafter until their stated
expiration date as if Mr. Fishers employment had not
terminated. Mr. Fisher shall also be entitled to receive,
subject to Mr. Fisher signing a general release of claims,
an amount equal to three times his base salary in effect at the
time of termination, an amount equal to three times the highest
annual bonus paid to him for the three fiscal years ended
immediately before the date of termination, a pro-rated bonus
for the then-current fiscal year based on his annual bonus for
the fiscal year ended prior to his termination and an amount
equal to three times the annual premium or cost paid by us for
Mr. Fishers health, dental, vision, disability and
life insurance coverage in effect on his termination date.
Mr. Fisher owns IHM, a hotel management company that
currently manages five of our hotels and that we may engage to
manage certain additional hotels we acquire in the future
pursuant to management agreements with our taxable REIT
subsidiaries, or TRS Lessees. In order to permit IHM to qualify
as an eligible independent contractor as required by
applicable tax law, Mr. Fishers employment agreement
permits him to be the principal owner and serve as a director of
entities engaged in the hotel management business, and to devote
business time to those companies, so long as (1) such
activities do not interfere with the performance of his duties
to us and (2) he does not serve as an officer or employee
of, or receive compensation for service as a director of, any
such entity providing hotel management services to us or our
affiliates.
Peter Willis and Dennis M. Craven. Our
employment agreements with Mr. Willis and Mr. Craven
have an initial term of three years and will renew for one-year
terms thereafter unless terminated by written notice delivered
at least 30 days before the end of the then-current term.
The employment agreements provide for annual base salaries to
each of Mr. Willis and Mr. Craven of $285,000, subject
to increase in the discretion of the Board or its Compensation
Committee. The employment agreements entitle each of
Mr. Willis and Mr. Craven to fringe benefits
substantially similar to those afforded to Mr. Fisher, as
described above.
Under their employment agreements, Mr. Willis and
Mr. Craven are eligible to earn annual cash bonuses at the
discretion of the Compensation Committee or to the extent that
prescribed individual and corporate goals established by the
Committee are achieved.
Mr. Williss and Mr. Cravens employment
agreements provide for certain payments in the event of
termination by us for cause, resignation without
good reason, death or disability or any reason other
than a termination by us without cause or
resignation with good reason. The definitions of
cause and good reason in
Mr. Williss and Mr. Cravens employment
agreements are the same as those in Mr. Fishers
employment agreement, as described above. In any such event,
Mr. Williss and Mr. Cravens employment
agreements provide for the payment of any earned but unpaid
compensation up to the date of termination and any benefits due
under the terms of any of our employee benefit plans.
Mr. Williss and Mr. Cravens employment
agreements provide for certain severance payments in the event
of termination by us without cause or resignation
for good reason. In any such event, Mr. Willis
or Mr. Craven, as applicable, would be entitled to receive
any earned but unpaid compensation up to the date of his
termination and any benefits due to him under the terms of our
employee benefit plans. In addition, subject to his signing a
general release of claims, any outstanding options, restricted
shares and other equity awards held by Mr. Willis or
Mr. Craven, as applicable, shall be vested and exercisable
as of the date of termination and outstanding options shall
remain exercisable thereafter until their stated expiration date
as if employment had not terminated, provided that
Mr. Craven will only become entitled to such accelerated
vesting and extended exercisability if he is subject to a
qualifying termination after September 8, 2011. Each of
Mr. Willis and Mr. Craven, as applicable, shall also
be entitled to receive, subject to his signing a general release
of claims, an amount equal to his base salary at the time of
termination, an amount equal to the highest annual bonus paid to
him for the three fiscal years ended immediately before the date
of termination, a pro-rated bonus for the then-current fiscal
year based on his annual bonus for the fiscal year ended prior
to his termination and an amount equal to the annual premium or
cost paid by us for his health, dental, vision, disability and
life insurance coverage in effect on his termination date.
21
Mr. Williss and Mr. Cravens employment
agreements provide for higher severance payments in the event of
termination by us without cause no more than ninety
days before a change in control or on or after a change in
control or upon resignation for good reason on or
after a change in control. The agreement defines change in
control as (1) a person becoming the beneficial owner
of 50% or more of our voting shares, (2) a transfer of 50%
or more of our total assets, (3) our merger, consolidation
or statutory share exchange, except where our shareholders
immediately before the transaction own more than 50% of the
outstanding voting securities of the surviving entity,
(4) the date members of the Board at the time of completion
of our IPO, which includes our initial independent trustees (or
members of the Board whose nomination or election to the Board
was approved by a majority of such members), cease to constitute
a majority of the Board or (5) our complete liquidation or
dissolution. In any such event, each of Mr. Willis and
Mr. Craven is entitled to receive any earned but unpaid
compensation up to the date of his termination and any benefits
due to him under the terms of our employee benefit plans. In
addition, subject to his signing a general release of claims,
all outstanding options, restricted shares and other equity
awards shall be vested and exercisable as of the date of
termination and outstanding options held by Mr. Willis or
Mr. Craven, as applicable, shall remain exercisable
thereafter until their stated expiration date as if
Mr. Williss or Mr. Cravens employment, as
applicable, had not terminated. Each of Mr. Willis and
Mr. Craven shall also be entitled to receive, subject to
his signing a general release of claims, an amount equal to two
times his base salary at the time of termination, an amount
equal to two times the highest annual bonus paid to him for the
three fiscal years ended immediately before the date of
termination, a pro-rated bonus for the then-current fiscal year
based on his annual bonus for the fiscal year ended prior to his
termination and an amount equal to two times the annual premium
or cost paid by us for his health, dental, vision, disability
and life insurance coverage in effect on his termination date.
22
Potential
Payments upon Termination or Change of Control
The following table and accompanying footnotes reflect the
estimated potential amounts payable to Messrs. Fisher,
Willis and Craven under their employment agreements and the
Companys compensation and benefit plans and arrangements
in the event the executives employment is terminated under
various scenarios, including involuntary termination without
cause, voluntary or involuntary termination with cause,
voluntary resignation with good reason, involuntary or good
reason termination in connection with a change in control and
termination due to death and disability. The amounts shown below
are estimates of the amounts that would be paid to
Messrs. Fisher, Willis and Craven upon termination of their
employment assuming that such termination was effective on
December 31, 2010. Actual amounts payable will depend upon
compensation levels at the time of termination, the amount of
future equity awards and other factors, and will likely be
greater than amounts shown in this table.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment in Lieu of
|
|
|
|
|
|
|
|
|
|
|
Medical/Welfare
|
|
Acceleration and
|
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|
|
Total
|
|
|
|
|
Benefits
|
|
Continuation of
|
|
Excise Tax
|
|
Termination
|
|
|
Cash Severance
|
|
(Present Value)
|
|
Equity Awards
|
|
Gross-up
|
|
Benefits
|
|
|
Payment ($)
|
|
($)(5)
|
|
($)(6)
|
|
($)(7)
|
|
($)
|
|
Jeffrey H. Fisher(1),(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination Without Cause(3)
|
|
$
|
900,000
|
|
|
$
|
35,000
|
|
|
$
|
3,701,678
|
|
|
$
|
0
|
|
|
$
|
4,636,678
|
|
Voluntary Termination or Involuntary Termination with Cause
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Change in Control (No Termination)
|
|
|
0
|
|
|
|
0
|
|
|
|
3,701,678
|
|
|
|
0
|
|
|
|
3,701,678
|
|
Involuntary or Good Reason Termination in Connection With Change
In Control(4)
|
|
|
900,000
|
|
|
|
105,000
|
|
|
|
3,701,678
|
|
|
|
0
|
|
|
|
4,706,678
|
|
Death or Disability
|
|
|
0
|
|
|
|
0
|
|
|
|
3,701,678
|
|
|
|
0
|
|
|
|
3,701,678
|
|
Peter Willis(1),(2)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination Without Cause(3)
|
|
$
|
285,000
|
|
|
$
|
20,000
|
|
|
$
|
742,354
|
|
|
$
|
0
|
|
|
$
|
1,047,354
|
|
Voluntary Termination or Involuntary Termination with Cause
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Change in Control (No Termination)
|
|
|
0
|
|
|
|
0
|
|
|
|
742,354
|
|
|
|
0
|
|
|
|
742,354
|
|
Involuntary or Good Reason Termination in Connection With Change
In Control(4)
|
|
|
570,000
|
|
|
|
40,000
|
|
|
|
742,354
|
|
|
|
0
|
|
|
|
1,352,354
|
|
Death or Disability
|
|
|
0
|
|
|
|
0
|
|
|
|
742,354
|
|
|
|
0
|
|
|
|
742,354
|
|
Dennis M. Craven(1),(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination Without Cause(3)
|
|
$
|
285,000
|
|
|
$
|
20,000
|
|
|
$
|
633,075
|
|
|
$
|
0
|
|
|
$
|
938,075
|
|
Voluntary Termination or Involuntary Termination with Cause
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Change in Control (No Termination)
|
|
|
0
|
|
|
|
0
|
|
|
|
633,075
|
|
|
|
0
|
|
|
|
633,075
|
|
Involuntary or Good Reason Termination in Connection With Change
In Control(4)
|
|
|
570,000
|
|
|
|
40,000
|
|
|
|
633,075
|
|
|
|
0
|
|
|
|
1,243,075
|
|
Death or Disability
|
|
|
0
|
|
|
|
0
|
|
|
|
633,075
|
|
|
|
0
|
|
|
|
633,075
|
|
|
|
|
(1) |
|
The amounts shown in the table do not include accrued salary,
earned but unpaid bonuses, accrued but unused vacation pay or
the distribution of benefits from any tax-qualified retirement
or 401(k) plan. Those amounts are payable to
Messrs. Fisher, Willis and Craven upon any termination of
employment, including an involuntary termination with cause and
a resignation without good reason. |
|
(2) |
|
A termination of employment due to death or disability entitles
Messrs. Fisher, Willis and Craven to benefits under the
Companys life insurance and disability insurance plans. In
addition, outstanding restricted share awards and LTIP awards
immediately vest upon a termination of employment due to death
or disability. |
|
(3) |
|
Mr. Fishers employment agreement provides for the
payment of a cash severance benefit upon an involuntary
termination without cause or a resignation with good reason
(without distinction for terminations before or after a change
in control). The cash severance benefit, which is payable in a
single payment, is equal to the sum of (a) three times
Mr. Fishers annual base salary, (b) three times
the highest annual bonus paid to Mr. Fisher for the three
prior fiscal years and (c) one times the amount of the
annual bonus paid to Mr. Fisher for the prior fiscal year,
prorated based on the number of days of employment in the |
23
|
|
|
|
|
year of termination. As of December 31, 2010, no severance
benefit is payable with respect to the amounts described in
clause (b) and clause (c) of the preceding sentence
because Mr. Fisher has not received an annual bonus with
respect to 2010 (or with respect to 2009, the year of the
Companys formation). Consequently, the cash severance
benefit shown for Mr. Fisher is three times his annual base
salary as in effect as of December 31, 2010. |
|
|
|
Mr. Fishers employment agreement also provides for
the payment of a single sum cash payment upon an involuntary
termination without cause or a resignation with good reason
(without distinction for terminations before or after a change
in control). The payment is in lieu of continued participation
in the Companys health and welfare benefit plans (although
Mr. Fisher may elect to pay for continuation coverage
mandated by law). The payment is equal to three times the annual
premium or portion of the annual premium paid by the Company for
(a) health, dental and vision insurance coverage for
Mr. Fisher and his eligible dependents and (b) life
insurance and disability insurance coverage for Mr. Fisher. |
|
|
|
The employment agreements with Messrs. Willis and Craven
provide for the payment of a cash severance benefit upon an
involuntary termination without cause or a resignation with good
reason and not in connection with a change in control. The cash
severance benefit for each of Messrs. Willis and Craven is
equal to the sum of (a) one times the executives
annual base salary, (b) one times the highest annual bonus
paid to the executive for the three prior fiscal years and
(c) the amount of the annual bonus paid to the executive
for the prior fiscal year, prorated based on the number of days
of employment in the year of termination. As of
December 31, 2010, no severance benefit is payable with
respect to the amounts described in clause (b) and
clause (c) of the preceding sentence because neither
Mr. Willis nor Mr. Craven received an annual bonus
with respect to 2010 (or with respect to 2009, the year of the
Companys formation). Consequently, the cash severance
benefit shown for Messrs. Willis and Craven is one times
the executives annual base salary as in effect as of
December 31, 2010. |
|
|
|
The employment agreements with Messrs. Willis and Craven
also provide for the payment of a single sum cash payment upon
an involuntary termination without cause or a resignation with
good reason and not in connection with a change in control. The
payment is in lieu of continued participation in the
Companys health and welfare benefit plans (although
Messrs. Willis and Craven may elect to pay for continuation
coverage mandated by law). The payment is equal to one times the
annual premium or portion of the annual premium paid by the
company for (a) health, dental and vision insurance
coverage for Messrs. Willis and Craven and their eligible
dependents and (b) life insurance and disability insurance
coverage for Messrs. Willis and Craven. |
|
(4) |
|
The severance and other benefit payable to Mr. Fisher on
account of an involuntary termination without cause or a
resignation with good reason in connection with a change in
control are the same as described in note (3) above. |
|
|
|
The employment agreements with Messrs. Willis and Craven
provide for the payment of benefits upon an involuntary
termination without cause or a resignation with good reason in
connection with a change of control. (A termination in either
case is in connection with a change in control if it
occurs on or after a change in control or, in the case of an
involuntary termination without cause, during the ninety day
period before a change in control.) In those events, the
severance and other benefits payable to Messrs. Willis and
Craven are the same as described in note (3) above, except
that two times is substituted for one
times each time it appears in note (3). |
|
(5) |
|
The amounts shown in this column are estimates of the annual
premiums payable by the Company for health care, insurance and
other benefits expected to be provided to Messrs. Fisher,
Willis and Craven. |
|
(6) |
|
The amounts shown in this column represent the compensation to
Messrs. Fisher, Willis and Craven due to accelerated
vesting of LTIP awards and restricted share awards that were
part of our 2010 compensation program, in each case based on the
fair market value of our common shares as of December 31,
2010 ($17.25 per share). Outstanding LTIP awards and restricted
share awards not previously vested are forfeited upon
termination of employment unless employment ends on account of
death, disability, an involuntary termination without cause or a
resignation with good reason (in which case the restricted share
awards and LTIP awards will accelerate and fully vest). With
respect to Mr. Craven, restricted share awards and LTIP
awards will accelerate and fully vest upon an involuntary
termination without cause or a |
24
|
|
|
|
|
resignation with good reason that occurs after September 8,
2011. Outstanding restricted share awards and LTIP awards also
will accelerate and fully vest upon a change in control. |
|
|
|
Amounts reflecting accelerated vesting of equity awards in the
rows Change In Control (No Termination) and
Involuntary or Good Reason Termination in Connection With
Change In Control will be paid upon only one of the
specified triggering events (not both) and will not be
duplicated in the event that the executive incurs a qualifying
termination following a change in control event that has
previously resulted in acceleration. |
|
(7) |
|
The employment agreements with Messrs. Fisher, Willis and
Craven do not provide an indemnification or
gross-up
payment for the parachute payment excise tax under
Sections 280G and 4999 of the Code. The employment
agreements instead provide that the severance and any other
payments or benefits that are treated as parachute payments
under the Code will be reduced to the maximum amount that can be
paid without an excise tax liability. The parachute payments
will not be reduced, however, if the executive will receive
greater after-tax benefits by receiving the total or unreduced
benefits (after taking into account any excise tax liability
payable by the executive). The amounts shown in the table assume
that Messrs. Fisher, Willis and Craven will receive the
total or unreduced benefits. |
Equity
Compensation Plan Information
The following table provides information, as of
December 31, 2010, relating to our Equity Incentive Plan
pursuant to which grants of common share options, share awards,
share appreciation rights, performance units and other
equity-based awards options may be granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Number of Securities to be
|
|
Weighted-Average
|
|
Remaining Available
|
|
|
Issued Upon Exercise
|
|
Exercise Price of
|
|
for Future Issuance Under
|
|
|
of Outstanding Options,
|
|
Outstanding Options,
|
|
Equity Compensation
|
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Plans
|
|
Equity compensation plans approved by security holders(1)
|
|
|
|
|
|
|
|
|
|
|
211,730
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
211,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Our Equity Incentive Plan was approved by our companys
sole trustee and our companys sole shareholder prior to
completion of our IPO. |
REPORT OF
THE COMPENSATION COMMITTEE
We have reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on our review and
discussions with management, we recommended to the Board of
Trustees that the Compensation Discussion and Analysis be
included in this proxy statement.
The Compensation Committee
Gerry Goldsmith (Chairman)
Miles Berger
Joel Zemans
25
Certain
Relationships and Related Transactions
Concurrently with the completion of our IPO, in a separate
private placement, we sold an aggregate of 500,000 common shares
(representing approximately 5.5% of the common shares
outstanding upon completion of the IPO, including common shares
sold pursuant to the underwriters over-allotment option)
to Mr. Fisher, our chairman, president and chief executive
officer, at a price per share equal to the initial public
offering price per share and without payment of any underwriting
discount or commission by us. We used approximately
$3.2 million of the net proceeds from the IPO to reimburse
Mr. Fisher for out-of pocket expenses he incurred in
connection with our formation and the IPO, including
$2.5 million he funded as earnest money deposits for the
acquisition of our initial six hotels. We also used $10,000 of
the net proceeds from the IPO to repurchase the shares
Mr. Fisher acquired in connection with our formation and
initial capitalization.
Upon completion of our IPO, our operating partnership issued
246,960 LTIP units to Mr. Fisher, 32,585 LTIP units to
Mr. Willis and 15,435 LTIP units to Mr. Morales. Upon
Mr. Craven joining our company in September 2010, our
operating partnership issued 26,250 LTIP units to
Mr. Craven. These LTIP units vest ratably on each of the
first five anniversaries of the date of grant. LTIP units,
whether vested or not, will receive the same
per-unit
profit distributions as common units in our operating
partnership, which distributions generally will equal per share
distributions on our common shares. Mr. Morales LTIP
units were cancelled when his employment terminated in September
2010.
On May 20, 2010, we granted 15,650 restricted shares to
Mr. Fisher, 10,450 restricted shares to Mr. Willis,
and 10,450 shares to Mr. Morales, having aggregate
values of $295,159, $197,087, and $197,087, respectively, based
upon the closing price for our common shares on the NYSE on
May 19, 2010 of $18.86. On September 9, 2010, we
granted 10,450 restricted shares to Mr. Craven, having an
aggregate value of $176,292, based upon the closing price for
our common shares on the NYSE on September 8, 2010 of
$16.87. Distributions will be paid on these and any other
restricted common shares, whether vested or not, when
distributions are declared and paid on our common shares. 7,200
of Mr. Morales restricted shares were vested upon
termination of his employment in September 2010 and the
remainder were forfeited and cancelled.
We entered into employment agreements with each of
Messrs. Fisher, Willis and Craven that provide for payments
and other benefits to Messrs. Fisher, Willis and Craven if
their employment with us is terminated under certain
circumstances. See Compensation Discussion and
Analysis Employment Arrangements.
We have also entered into indemnification agreements with our
trustees and our executive officers providing for procedures for
indemnification by us to the fullest extent permitted by law and
advancements by us of certain expenses and costs relating to
claims, suits or proceedings arising from their service to us.
As of April 20, 2011, five (5) of our hotels are (and
the hotel we have under contract to purchase will be) managed by
IHM, which is 90% owned by Mr. Fisher. The management
agreements with IHM have an initial term of five years and may
be renewed for two five-year periods at the option of IHM by
written notice to us no later than 90 days prior to the
termination date. The IHM management agreements provide for
early termination upon sale of any IHM managed hotel for no
termination fee, with six months advance notice. The IHM
management agreements can also be terminated for cause.
Additionally, if hotel operating performance does not meet
specified levels we will be able to terminate any IHM management
agreements at no cost. Management agreements with IHM provide
for a base management fee of 3% of the hotels gross
revenues, an accounting fee of $1,000 per month per hotel and,
if certain financial thresholds are met or exceeded, an
incentive management fee equal to 10% of the hotels net
operating income less fixed costs, base management fees and a
specified return threshold. The incentive management fee is
capped at 1% of gross hotel revenues. For the year ended
December 31, 2010, we paid IHM an aggregate of
$0.2 million in management fees pursuant to these
management agreements.
Because Mr. Fisher is our Chairman, President and Chief
Executive Officer and controls IHM, conflicts of interest exist
between Mr. Fisher and us regarding:
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enforcement of the terms of any management agreements between us
and IHM;
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26
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whether and on what terms these management agreements will be
renewed upon the expiration;
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whether and on what terms management contracts will be awarded
to IHM; and
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whether hotel properties will be sold.
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Under the hotel management agreements, IHM generally is
responsible for complying with our various franchise agreements,
subject to us making sufficient funding available. Conflicts of
interest exist between us and Mr. Fisher regarding
IHMs compliance with franchise agreements, which could
result in:
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the termination of those agreements and related substantial
penalties; or
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other actions or failures to act by IHM that could result in
liability to us or our TRS lessees.
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We share our corporate information technology infrastructure
with IHM as of January 1, 2011. We and IHM have agreed to a
cost sharing arrangement under which we bear 5% of the total
costs of operating and maintaining the IT function (including
depreciation taken by us on the IT infrastructure).
IHM has obtained an employment practices liability insurance
policy that covers our employees. We reimbursed IHM for our pro
rata portion of the premium for this policy. In addition, IHM is
required to maintain a health benefit plan in which our
employees participate. Our reimbursement of IHM is based on the
number of our employees participating in the plan and the
coverage and benefit levels selected by those employees.
Conflicts may arise between us and IHM with respect to whether
certain expenditures are classified as capital expenditures,
which are capitalized by us and do not immediately affect
earnings, or repairs and maintenance, which are expensed as
incurred and therefore reduce the amount available to be earned
by IHM as incentive management fees.
Other than the compensation arrangements described in this proxy
statement, Mr. Fisher has not received any compensation or
other consideration as promoter or otherwise in connection with
the formation of our company.
From time to time in connection with certain acquisitions and
dispositions or other transactions, we may engage a brokerage
firm with which Mr. Fishers daughter is employed.
Section 16(a)
Beneficial Ownership Reporting Compliance
Under federal securities laws, the Companys trustees and
executive officers, and any persons beneficially owning more
than ten percent (10%) of a registered class of the
Companys equity securities, are required to report their
ownership of common shares and any changes in that ownership to
the SEC. These persons are also required by SEC regulations to
furnish the Company with copies of these reports. Specific due
dates for these reports have been established, and the Company
is required to report in the Proxy Statement any failure to
timely file such reports by those due dates during the 2010
fiscal year. In April 2010, a Form 4 filed on behalf of
Mr. Fisher was inadvertently filed late.
AUDIT
COMMITTEE REPORT
The Audit Committee is composed of three trustees who are
independent as determined by the Board of Trustees, in its
business judgment, under the rules of the New York Stock
Exchange and the Securities and Exchange Commission. The Audit
Committee operates under a written charter adopted by the Board
of Trustees. The members of the Audit Committee are Glen Gilbert
(Chair), Miles Berger and Joel F. Zemans. The Audit Committee
appointed, and the Board of Trustees ratified the selection of
the Companys independent registered certified public
accounting firm, PricewaterhouseCoopers LLP.
Management is responsible for the Companys internal
controls and the financial reporting process. The independent
accountants are responsible for performing an independent audit
of the Companys consolidated financial statements in
accordance with generally accepted auditing standards and for
issuing a report thereon. The Audit Committees
responsibility is to monitor and oversee these processes, to
monitor the Companys
27
compliance with legal requirements and to monitor the
independence and performance of the Companys auditors. The
Audit Committee is also responsible for monitoring the
Companys procedures for compliance with the rules for
taxation as a real estate investment trust (REIT)
under
Sections 856-860
of the Code.
The Audit Committee has met with management and the independent
registered certified public accounting firm,
PricewaterhouseCoopers LLP. Management represented to the Audit
Committee that the Companys consolidated financial
statements were prepared in accordance with generally accepted
accounting principles, and the Audit Committee has reviewed and
discussed the audited consolidated financial statements with
management and PricewaterhouseCoopers LLP, both together and
separately. The Audit Committee reviewed and discussed with
management and PricewaterhouseCoopers LLP the audited
consolidated financial statements for the year ended
December 31, 2010, managements assessment of the
effectiveness of the Companys internal control over
financial reporting and PricewaterhouseCoopers LLPs
evaluation of the effectiveness of the Companys internal
control over financial reporting. The Audit Committee has
discussed with PricewaterhouseCoopers LLP the matters that are
required to be discussed by Statement on Auditing Standards Nos.
61, 89 and 90 (Codification of Statements on Auditing Standards,
AU § 380).
The Audit Committee received from PricewaterhouseCoopers LLP the
written disclosures and the letter required by PCAOB
Rule 3526 (Communication with Audit Committees Concerning
Independence), and has discussed with PricewaterhouseCoopers LLP
the issue of its independence from the Company. The Audit
Committee also concluded that PricewaterhouseCoopers LLPs
provision of services to the Company and its affiliates is
compatible with PricewaterhouseCoopers LLPs independence.
Based upon the Audit Committees discussion with management
and PricewaterhouseCoopers LLP and the Audit Committees
review of the audited consolidated financial statements, the
representations of management and the written disclosures and
the letter of PricewaterhouseCoopers LLP to the Audit Committee,
the Audit Committee recommended that the Board of Trustees
include the Companys audited consolidated financial
statements in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the
Securities and Exchange Commission.
The Audit Committee charter provides that:
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the Committee is directly responsible for the appointment,
compensation, and oversight of the work of the Companys
independent auditor, that the independent auditor reports
directly to the Committee, and that the Committee retains and
may terminate the services of the independent auditor;
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the Committee must approve in advance all audit engagement fees
and terms, and all audit and non-audit services to be provided
by the independent auditor;
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the Committee must establish procedures for the handling of
complaints regarding accounting, internal controls, or auditing
matters and for the confidential, anonymous submission of
concerns by employees regarding accounting and auditing matters;
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the Committee must establish policies and procedures for the
engagement of the outside auditor to perform non-audit services,
including pre-approval of all non-audit services;
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the Committee will review and discuss the adequacy and
effectiveness of disclosure controls and procedures
in addition to other internal controls already reviewed by the
Committee; and
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the Committee has the authority and funding to engage
accountants, lawyers and other advisers and experts as it deems
necessary.
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The Committees responsibilities include obtaining and
reviewing, at least annually, a report by the outside auditor
describing the outside auditors internal quality-control
procedures, any issues raised by the most recent internal
quality-control review, or peer review, of the outside auditor,
or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, with
respect to independent audits carried out by the outside
auditor, and any steps taken to deal with any such issues; and
the Committees responsibilities include establishing clear
hiring policies for employees or former employees of the
Companys outside auditor. A copy of the Audit Committee
charter is posted on the Companys website at
28
www.chathamlodgingtrust.com. The above summary of the Audit
Committee charter is qualified by reference to the complete
charter, which should be read in its entirety.
The Audit Committee recommended, and the Board approved, a
procedure for the confidential submission, receipt, retention
and treatment of concerns and complaints regarding the
Companys accounting or auditing practices. The Company has
contracted with an independent company to establish and
maintain, and has widely disseminated the existence and
availability of, a
seven-day-a-week,
twenty-four-hour-a-day toll-free telephone number and website
for complaints and concerns regarding accounting or auditing
practices. The Companys General Counsel will promptly
conduct an initial screening of any such complaint or concern to
assess its legitimacy and significance and determine whether to
(i) report the complaint or concern to the Chairman of the
Audit Committee, (ii) investigate further, or
(iii) close the file. Further investigation would involve
consulting appropriate senior management not implicated in the
complaint or concern and may involve consulting the
Companys outside counsel and independent auditors.
Information on the complaint or concern will be maintained in a
confidential file for at least seven years. The Company shall
take all appropriate steps to prevent retaliation against any
individual because that person submitted a complaint or concern.
The General Counsel shall provide to the Audit Committee a
quarterly report of all complaints and concerns received and
their status. Where a complaint or concern (i) relates to
accounting, internal accounting controls or auditing matters or
(ii) alleges or otherwise suggests the existence of
(a) material inaccuracies in financial reporting,
(b) fraud or other intentional misconduct with respect to
accounting, auditing or internal control over financial
reporting or (c) material non-compliance with applicable
law, the General Counsel shall promptly report the complaint or
concern directly to the Chairman of the Audit Committee. Other
complaints and concerns will generally be reported to the Audit
Committee at the next regularly scheduled Audit Committee
meeting. The Audit Committee will from time to time report to
the Board the status of pending investigations and a summary of
complaints and concerns during the reporting period.
The foregoing has been furnished by the members of the Audit
Committee for the year ended December 31, 2010.
AUDIT COMMITTEE
Glen Gilbert (Chair)
Miles Berger
Joel F. Zemans
The foregoing Audit Committee Report shall not be deemed to
be incorporated by reference into any of the Companys
filings with the SEC, except as specified by the Company in any
such filing.
Code of
Ethics for Senior Financial Officers
The Board of Trustees has adopted a Code of Ethics for Senior
Financial Officers. A copy of the Code of Ethics may be obtained
at no charge by sending a written request to the Corporate
Secretary, 50 Cocoanut Row, Suite 216, Palm Beach, FL
33480. If the Company makes any amendments to this code (other
than technical, administrative, or non-substantive amendments)
or grants any waivers, including implicit waivers, from this
code to the CEO, chief financial officer, or controller, we will
disclose (on our website or in a
Form 8-K
report filed with the SEC) the nature of the amendment or
waiver, its effective date, and to whom it applies.
29
PROPOSAL 2:
INDEPENDENT PUBLIC ACCOUNTANTS
Retention of Auditor. PricewaterhouseCoopers
LLP has served as independent registered certified public
accounting firm for the Company and its subsidiaries for the
year ended December 31, 2010. The Audit Committee has
selected PricewaterhouseCoopers LLP as independent auditor for
the year ending December 31, 2011, if ratified by the
shareholders, until and unless changed by action of the Audit
Committee of the Board of Trustees. Although shareholder
approval of the appointment is not required, the Company is
asking the shareholders to ratify the appointment. If the
shareholders do not ratify the appointment, the appointment will
be reconsidered by the Audit Committee based on all relevant
facts and circumstances at the time. A representative of
PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have an opportunity to make a statement to
shareholders if he desires to do so and will be available to
respond to appropriate questions.
Audit Fees. The following chart sets forth the
amounts billed to the Company by PricewaterhouseCoopers LLP with
respect to services provided in 2010 and 2009:
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Amount
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Type
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2010
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2009
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Audit Fees
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$
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463,907
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$
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74,000
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Audit-Related Fees
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$
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494,601
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$
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168,000
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Tax Fees
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All Other Fees
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$
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1,800
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$
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960,308
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$
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242,000
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The Audit-Related Fees for 2010 were for professional services
rendered in conjunction with audits related to certain
acquisitions completed during 2010. The Audit-Related Fees for
2009 were for professional services rendered in conjunction with
audits related to certain acquisitions completed during 2010.
The $1,800 in All Other Fees for 2010 was for a software license
fee. The Audit Committees current policy on approval of
non-audit services by the independent auditor is to approve at
the beginning of each year the scope and fees for any non-audit
services for the year that have been identified, and to approve
in advance the scope and fees for any additional non-audit
services as the need for such services arise. According to
PricewaterhouseCoopers LLP, only full-time permanent employees
of PricewaterhouseCoopers LLP worked on the Companys audit
in 2010.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE
FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
Vote
Required
The affirmative vote of a majority of the votes cast on this
proposal will constitute ratification of the appointment of
PricewaterhouseCoopers LLP.
The Board of Trustees unanimously recommends that you vote
FOR Proposal 2.
PROPOSAL 3:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with recent legislation, the Company is providing
shareholders with an advisory (non-binding) vote on compensation
programs for our Named Executive Officers (sometimes referred to
as say on pay). Accordingly, you may vote on the
following resolution at the 2011 annual meeting:
Resolved, that the shareholders approve, on an advisory
basis, the compensation of the Companys Named Executive
Officers as disclosed in the Compensation Discussion and
Analysis, the accompanying compensation tables, and the related
narrative disclosure in this Proxy Statement.
30
This vote is nonbinding. The Board and the Compensation
Committee, which is comprised of independent Trustees, expect to
take into account the outcome of the vote when considering
future executive compensation decisions to the extent they can
determine the cause or causes of any significant negative voting
results.
As described in detail under Compensation Discussion and
Analysis our compensation programs are designed to
motivate our executives to create and sustain a successful
company. If fully vested, equity compensation in the form of
restricted shares that are subject to time-based vesting is the
largest component of executive compensation. We believe that our
compensation program, with its balance of short-term incentives
(including cash bonus awards and performance conditions for
awards of restricted shares) and long-term incentives (including
equity awards that vest over up to five years) reward sustained
performance that is aligned with long-term shareholder
interests. Shareholders are encouraged to read the Compensation
Discussion and Analysis, the accompanying compensation tables,
and the related narrative disclosure.
The Board of Trustees unanimously recommends that you vote
FOR the approval, on an advisory basis, of the compensation of
our Named Executive Officers as disclosed in the Compensation
Discussion and Analysis, the accompanying compensation tables,
and the related narrative disclosure.
PROPOSAL 4:
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
EXECUTIVE
COMPENSATION
In addition to providing shareholders with the opportunity to
cast an advisory vote on executive compensation, the Company
this year is providing shareholders with an advisory vote on
whether the advisory vote on executive compensation should be
held every one, two or three years.
The Board believes that a frequency of every three
years for the advisory vote on executive compensation is
the optimal interval for conducting and responding to a
say on pay vote. Shareholders who have concerns
about executive compensation during the interval between
say on pay votes are welcome to bring their specific
concerns to the attention of the Board. Please refer to
Shareholder Communications to the Board in this
Proxy Statement for information about communicating with the
Board.
The proxy card provides shareholders with the opportunity to
choose among four options (holding the vote every one, two or
three years, or abstaining) and, therefore, shareholders will
not be voting to approve or disapprove the Boards
recommendation.
Although this advisory vote on the frequency of the say on
pay vote is nonbinding, the Board and the Compensation
Committee will take into account the outcome of the vote when
considering the frequency of future advisory votes on executive
compensation.
The Board of Trustees unanimously recommends that you vote
for the option of every three years for future
advisory votes on executive compensation.
OTHER
MATTERS
Neither the Board of Trustees nor management intends to bring
before the Annual Meeting any business other than the matters
referred to in the Notice of Meeting and this Proxy Statement.
If any other business should properly come before the Annual
Meeting, or any adjournment thereof, the persons named in the
proxy will vote on such matters according to their best judgment.
The Company paid for this proxy solicitation. We hired Wells
Fargo Shareholder Services to assist in the distribution of
proxy materials and solicitation of votes. We also reimburse
brokerage houses and other custodians, nominees and fiduciaries
for their reasonable
out-of-pocket
expenses for forwarding proxy and solicitation materials to
shareholders. Proxies will be solicited by mail, telephone, or
other means of communication. Our trustees, officers and regular
employees who are not specifically employed for proxy
solicitation purposes and who will not receive any additional
compensation for such activities may also solicit proxies.
31
SHAREHOLDER
PROPOSALS FOR 2012 ANNUAL MEETING
In order for a shareholder proposal to be included in the proxy
statement for the 2012 annual meeting of shareholders, it must
comply with SEC
Rule 14a-8
and be received by the Company no later than the date which is
120 days prior to the one-year anniversary of the date of
this Proxy Statement or December 22, 2011. Proposals may be
mailed to the Company, to the attention of the Secretary,
Chatham Lodging Trust, 50 Cocoanut Row, Suite 216, Palm
Beach, Florida 33480. A shareholder who intends to present a
proposal at the Companys annual meeting in 2012, other
than pursuant to
Rule 14a-8,
must comply with the requirements as set forth in our Bylaws,
provide the Company notice of such intention by at least
December 22, 2011, and such proposal must be a proper
matter for shareholder action under Maryland corporate law, or
management of the Company will have discretionary voting
authority at the 2012 annual meeting with respect to any such
proposal without discussion of the matter in the Companys
proxy statement.
ANNUAL
REPORT TO SHAREHOLDERS AND
FORM 10-K
The fiscal 2010 Annual Report to Shareholders (which is not a
part of our proxy soliciting materials), is being mailed with
this Proxy Statement to those shareholders that received a copy
of the proxy materials in the mail. Additionally, and in
accordance with SEC rules, you may access our Proxy Statement at
www.proxyvote.com, a cookie-free website that does
not identify visitors to the site. A copy of the
Companys Annual Report on
Form 10-K
filed with the SEC will be provided to shareholders without
charge upon written request directed to Investor Relations,
Chatham Lodging Trust, 50 Cocoanut Row, Suite 216, Palm
Beach, Florida 33480,
(561) 227-1351.
The Company makes available on or through our website free of
charge our Annual Report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and all amendments to such reports filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after filing.
GENERAL
INFORMATION
A list of shareholders of record entitled to vote at the Annual
Meeting will be available at the Annual Meeting and will also be
available for ten business days prior to the Annual Meeting
between the hours of 9:00 a.m. and 4:00 p.m., Eastern
time, at the office of the Secretary, Chatham Lodging Trust, 50
Cocoanut Row, Suite 216, Palm Beach, Florida 33480. A
shareholder may examine the list for any legally valid purpose
related to the Annual Meeting.
The Company is organized under Maryland law, which specifically
permits electronically transmitted proxies, provided that the
transmission set forth or be submitted with information from
which it can reasonably be determined that the transmission was
authorized by the shareholder. The electronic voting procedures
provided for the Annual Meeting are designed to authenticate
each shareholder by use of a control number to allow
shareholders to vote their shares and to confirm that their
instructions have been property recorded.
As permitted by SEC rules, the Company will deliver only one
Annual Report or Proxy Statement to multiple shareholders
sharing the same address, unless the Company has received
contrary instructions from one or more of the shareholders. The
Company will, upon written or oral request, deliver a separate
copy of the Annual Report or Proxy Statement to a shareholder at
a shared address to which a single copy of the Annual Report or
Proxy Statement was delivered and will include instructions as
to how the shareholder can notify the Company that the
shareholder wishes to receive a separate copy of the Annual
Report or Proxy Statement in the future. Registered shareholders
wishing to receive a separate Annual Report or Proxy Statement
in the future or registered shareholders sharing an address
wishing to receive a single copy of the Annual Report or Proxy
Statement in the future may contact the Companys Transfer
Agent: Wells Fargo Bank, N.A., Shareholder Services,
PO Box 64874, St. Paul, MN 55075,
800-468-9716.
By order of the Board of Trustees,
Jeffrey H. Fisher
Chief Executive Officer
32
Shareowner ServicesSM P.O. Box 64945 St. Paul, MN 55164-0945 COMPANY # Vote by
Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week Your phone or Internet vote authorizes
the named proxies to vote your shares in the same manner as if you marked, signed and returned your
proxy card. VOTE BY INTERNET www.eproxy.com/cldt Use the Internet to transmit your voting
instructions up until 11:59 P.M. Eastern Time on May 25, 2011. Have your proxy card in hand when
you access the web site and follow the instructions. VOTE BY PHONE 1-800-560-1965 Use any
touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May
25, 2011. Have your proxy card in hand when you call and then follow the in structions. VOTE BY
MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have
provided. TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW, SIMPLY SIGN,
DATE, AND RETURN THIS PROXY CARD. The Board of Trustees recommends that you vote FOR the following:
1. Election of 01 Jeffrey H. Fisher 04 Jack P. DeBoer 07 Robert Perlmutter ??Vote FOR ??Vote
WITHHELD Trustees 02 Miles Berger 05 Glen R. Gilbert 08 Rolf Ruhfus all nominees from all nominees
03 Thomas J. Crocker 06 C. Gerald Goldsmith 09 Joel Zemans (except as marked) (Instructions: To
withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the
box provided to the right.) The Board of Trustees recommends you vote FOR the following: 2.
Ratification of selection of independent auditors. ??For ??Against ??Abstain The Board of Trustees
recommends you vote FOR the following: 3. Approval, on an advisory basis, of executive
compensation. ??For ??Against ??Abstain The Board of Trustees recommends you vote for a 3 Year
frequency: 4. An advisory vote on the frequency of holding future advisory votes ??1 Year ??2 Years
??3 Years ??Abstain on executive compensation. NOTE: Such other business as may properly come
before the meeting or any adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS. Date
___________________________ Address Change? Mark box, sign, and indic ate changes below: ?
Signature(s) in Box Please sign exactly as your name(s) appear(s) hereon. When signin g as
attorney, executor, admin s i trator, or other fiduciary, please give full title as such. Joint
owners should each sign personally . Al hold ers must sign. If a corporation or partnership, please
sign in full corporate or partnership name, by authorized officer. |
CHATHAM LODGING TRUST ANNUAL MEETING OF SHAREHOLDERS Thursday, May 26, 2011 9:00 AM The Brazilian
Court Hotel 301 Australian Avenue Palm Beach, FL 33480 CHATHAM LODGING TRUST 50 Cocoanut Row, Suite
216 Palm Beach, FL 33480 proxy This proxy is solicited by the Board of Directors for use at the
Annual Meeting on May 26, 2011. The shares of stock you hold in your account or in a dividend
reinvestment account wil be voted as you specify on the reverse side. If no choice is specified,
the proxy will be voted FOR Items 1, 2 and 3 and 3 Years for Item 4. By signing the proxy, you
revoke al prior proxies and appoin t Jeffrey Fis her and Dennis Craven, and each of them wit hf ull
power ofs ubstitution, tov otey our shares on the matters shown on the reverse side and any other
matters whic h may come before the Annual Meeting and all adjournments. See reverse for voting
instructions. |