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GENERAL INFORMATION ABOUT VOTING
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Solicitation of Proxies
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Voting Securities
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Voting
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Counting of Votes
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Right to Revoke Proxy
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Multiple Stockholders Sharing the Same Address
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PROPOSAL NUMBER ONE—ELECTION OF DIRECTORS
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BOARD OF DIRECTORS AND COMMITTEE MEMBERSHIP
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Attendance at Annual Meeting of Stockholders
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Board Committees and Meetings Nominees | | | | |
Compensation Committee InterlocksSummary of Director Diversity and Insider Participation Experience | | | | |
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Meetings of Non-Employee Directors
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Director Orientation and Continuing Education | | | | |
Board Leadership Structure and RoleDirector Change in Risk Oversight Occupation | | | | |
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Compensation Risk
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EXECUTIVE OFFICERS
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COMPENSATION DISCUSSION & ANALYSIS
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Executive Compensation Overview
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Business Strategy
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Compensation Objectives & Philosophy
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Effect of Ashford Inc. Spin-Off
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Say on Pay
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Review of Market Data for Peer Companies
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Company Performance
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2015 Equity Grant Decisions
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Stock Ownership Guidelines
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Tax and Accounting Considerations
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Adjustment or Recovery of Awards
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Security Ownership2022 Grants of Certain Beneficial Owners Plan-Based Awards | | | | |
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PROPOSAL NUMBER TWO—RATIFICATIONTWO-ADVISORY APPROVAL OF EXECUTIVE COMPENSATION | | | |
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| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2023. | |
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| The Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders and the Annual Report to Stockholders for the fiscal year ended December 31, 2022, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, are available at www.ahtreit.com by clicking the “Investor” tab, then the “SEC Filings” tab and then the “Annual Meeting Material” link. | |
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This summary highlights selected information contained in this proxy statement, but it does not contain all the information you should consider in determining how to vote your shares of
ContentsASHFORD HOSPITALITY TRUST, INC.
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 2016
our common stock at the 2023 annual meeting of stockholders of the Company. We urge you to read the entire proxy statement before you vote. This proxy statement was first mailed to stockholders on or about March 28, 2023.
We are providing these proxy materials in connection with the solicitation by the boardBoard of directorsDirectors of Ashford Hospitality Trust, Inc. of proxies to be voted on at our 2023 annual meeting of stockholders to be held at the Dallas Marriott Suites Medical/Market Center, 2493 N. Stemmons Freeway, Dallas, Texas 75207 beginning at 9:00 a.m., Central time, on May 17, 2016. The board of directors is requesting that you allow your shares to be represented and voted at the annual meeting of stockholders by the proxies named on the enclosedstockholders.
In this proxy
card. "We," "our," "us," "Ashford," "Ashford Trust," and the "company"statement:
• | “we,” “our,” “us,” “Ashford Trust,” and the “Company” each refers to Ashford Hospitality Trust, Inc., a Maryland corporation and real estate investment trust ("REIT") listed on The New York Stock Exchange ("NYSE") under the ticker symbol "AHT." "Ashford Prime" refers to Ashford Hospitality Prime Inc. (NYSE: AHP), a Maryland corporation and REIT that spun off from us in November 2013. "Ashford Inc." refers to Ashford Hospitality Trust, Inc., a Maryland corporation and real estate investment trust (“REIT”), shares of the common stock of which are listed for trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “AHT”; |
• | “Annual Meeting” refers to the 2023 annual meeting of stockholders of the Company; |
• | “Ashford LLC” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a subsidiary of Ashford Inc.; |
• | “Board” or “Board of Directors” refers to the Board of Directors of Ashford Hospitality Trust, Inc.; |
• | “Braemar” refers to Braemar Hotels & Resorts Inc. (NYSE: BHR), a Maryland corporation and REIT; |
• | “Premier” refers to Premier Project Management LLC, a Maryland limited liability company and a subsidiary of Ashford LLC. On August 8, 2018, Ashford Inc. completed its acquisition of Premier, formerly owned by Remington Lodging (as defined below). As a result, Ashford Inc. (through its indirect subsidiary, Premier) provides us with construction management, interior design, architecture, and the purchasing, expediting, warehousing, freight management, installation and supervision of property and equipment and related services; and |
• | “Remington Lodging” refers to Remington Lodging & Hospitality, LLC, a Delaware limited liability company and hotel management company that was owned by Mr. Monty J. Bennett, our Chairman of the Board, and his father, Mr. Archie Bennett, Jr., our Chairman Emeritus, before its acquisition by Ashford Inc. on November 6, 2019. |
• | “Remington Hotels” refers to the same entity after the acquisition was completed, resulting in Remington Lodging becoming a subsidiary of Ashford Inc. |
Ashford Inc. (NYSE MKT: AINC), a Delaware corporation that spun off from us in November 2014. "and Ashford LLC" refers to Ashford Hospitality Advisors, LLC, a Delaware limited liability company and a wholly owned subsidiary of Ashford Inc., which, together with Ashford Inc., servesserve as our external advisor. WeIn this proxy statement, we refer to Ashford Inc. and Ashford LLC collectively as our "advisor“advisor.”
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Annual Meeting of Stockholders | 9:00 A.M., Mountain Standard Time, May 9, 2023 | | | March 10, 2023 | |
| Four Seasons Resort Scottsdale at Troon North
10600 East Crescent Moon Drive
Scottsdale, Arizona 85262-8342 | | | 34,495,123 | |
| Election of Directors | | | ✔For each director nominee | | | | |
| Advisory Approval of Our Executive Compensation | | | ✔ For | | | | |
| Advisory Approval on the Frequency of Future Advisory Votes on Executive Compensation | | | ✔ Every Year | | | | |
| Ratification of Appointment of BDO USA, LLP | | | ✔ For | | | | |
| Approval of Amendment No. 3 to the Ashford Hospitality Trust, Inc. 2021 Stock Incentive Plan | | | ✔ For | | | | |
The following table provides summary information about each director nominee. All directors of the Company are elected annually and, in an uncontested election, by a majority of the votes cast at the Annual Meeting.
| Monty J. Bennett, 57 | | | 2003 | | | Chairman of Ashford Trust; Chairman and CEO of Ashford Inc.; Chairman of Braemar | | | | | | | | | | | | | | | ✔
(C) | | | Ashford Inc.; Braemar | |
| Benjamin J. Ansell, M.D., 55 | | | 2009 | | | Chairman and founder of UCLA Executive Health Program; Founder and Director of UCLA Medical Hospitality | | | | | | ✔ | | | | | | | | | ✔ | | | | |
| Amish Gupta, 43(L) | | | 2014 | | | Managing Partner of RETC, Limited Partnership | | | | | | | | | | | | ✔
(C) | | | ✔ | | | | |
| J. Robison Hays, III, 45 | | | 2020 | | | CEO and President of Ashford Trust; Senior Managing Director of Ashford Inc. | | | | | | | | | | | | | | | | | | | |
| Kamal Jafarnia, 56 | | | 2013 | | | General Counsel, Executive Vice President and Secretary of Lonsdale Investment Technology, Inc. | | | | | | ✔
(C) | | | ✔ | | | | | | | | | Bluerock Residential Growth REIT | |
| Frederick J. Kleisner, 78 (F) | | | 2016 | | | Retired CEO of Morgans Hotel Group Co. | | | ✔ | | | ✔ | | | ✔ | | | | | | | | | | |
| Sheri L. Pantermuehl, 66 (F) | | | 2018 | | | Chief Financial Officer of Alan Ritchey Inc. | | | ✔
(C) | | | | | | | | | ✔ | | | | | | | |
| Alan L. Tallis, 76 (F) | | | 2013 | | | Principal of Alan L. Tallis & Associates | | | ✔ | | | | | | ✔
(C) | | | ✔ | | | | | | | |
*
| Reflects current committee membership of current directors standing for re-election only and is not intended to imply any future committee membership after the election of our directors at the Annual Meeting. Our Board, in consultation with the Nominating and Corporate Governance Committee, will determine the appropriate committee membership for the forthcoming year after the completion of the Annual Meeting. |
A: Audit Committee
NCG: Nominating and Corporate Governance Committee
CC: Compensation Committee
RC: Related Party Transactions Committee
AC: Acquisitions Committee
(L): Lead Director
(F): Audit Committee financial expert
(C): Chair
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Summary of Director Diversity and Experience Our Board embodies a broad and diverse set of experiences, qualifications, attributes and skills. Below is a brief summary of some of the attributes, skills and experience of our director nominees. For a more complete description of each director nominee’s qualifications, please see their biographies starting on page 6.
" "Remington" refers Corporate Governance Highlights We are committed to Remington Lodging & Hospitality, LLC,the values of effective corporate governance and high ethical standards. Our Board believes that these values are conducive to the strong performance of the Company and creating long-term stockholder value. Our governance framework gives our independent directors the structure necessary to provide oversight, direction, advice and counsel to the management of the Company. This framework is described in more detail in our Corporate Governance Guidelines and codes of conduct, which can be found on our website at www.ahtreit.com by clicking the “Investor” tab, then the “Corporate Governance” tab and then the “Governance Documents” link.
Set forth below is a Delaware limited liabilitysummary of our corporate governance framework.
| • | | | All directors except our Chairman and Mr. Hays are independent | |
| • | | | We have five standing Board committees: | |
| | | | • | | | Audit Committee | |
| | | | • | | | Compensation Committee | |
| | | | • | | | Nominating and Corporate Governance Committee | |
| | | | • | | | Related Party Transactions Committee | |
| | | | • | | | Acquisitions Committee | |
| • | | | All committees, except the Acquisitions Committee, are composed entirely of independent directors | |
| • | | | All three Audit Committee members are “financial experts” | |
| • | | | Chairman of the Board separate from CEO | |
| • | | | Independent and empowered Lead Director with broadly-defined authority and responsibilities | |
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| • | | | Regular Board review of enterprise risk management and related policies, processes and controls | |
| • | | | Board committees exercise oversight of risk for matters within their purview | |
| • | | | We encourage open communication and strong working relationships among the Lead Director, Chairman, CEO and other directors and officers | |
| • | | | Our directors have direct access to our officers and management and employees of our advisor | |
| • | | | Stock ownership and equity award retention guidelines for directors and executives | |
| | | | • | | | Our directors should own shares of our common stock in excess of 3x his or her annual board retainer fee in effect at the time of such director’s election to the Board | |
| | | | • | | | Our CEO should own shares of our common stock in excess of 3x his annual base salary from our advisor in effect at the time of his appointment as CEO | |
| | | | • | | | Our other executive officers should own shares of our common stock in excess of 1.5x his or her annual base salary in effect at the time of his or her appointment to such office | |
| | | | • | | | Our directors and executive officers may not sell any stock granted to them for service to the Company until the required ownership levels described above are met | |
| • | | | Comprehensive insider trading policy | |
| • | | | Prohibitions on hedging and pledging transactions | |
| • | | | Directors elected by majority vote in uncontested director elections | |
| • | | | We have a non-classified Board and elect every director annually | |
| • | | | We do not have a stockholder rights plan | |
| • | | | We have opted out of the Maryland Control Share Acquisition Act (which provides certain takeover defenses) | |
| • | | | We have not elected to be subject to the provisions of the Maryland Unsolicited Takeover Act, which would permit our Board to classify itself without a stockholder vote | |
| • | | | Stockholders holding a stated percentage of our outstanding voting shares may call special meetings of stockholders | |
| • | | | Board receives regular updates from management regarding interaction with stockholders and prospective investors | |
| • | | | Robust annual Board and committee self-evaluation process | |
| • | | | Balanced and diverse Board composition | |
| • | | | Limits on outside public company board service | |
| • | | | Matters relating to our advisor or any other related party are subject to the approval of our independent directors or Related Party Transactions Committee | |
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PROPOSAL NUMBER ONE-ELECTION OF DIRECTORS All of our directors are elected annually by our stockholders. Our Nominating and property management company owned by Mr.Corporate Governance Committee has recommended, and our Board has nominated, Monty J. Bennett, Benjamin J. Ansell, M.D., Amish Gupta, J. Robison Hays, III, Kamal Jafarnia, Frederick J. Kleisner, Sheri L. Pantermuehl and Alan L. Tallis for election as our Chief Executive Officer and Chairman, and his father, Mr. Archie Bennett, Jr., our Chairman Emeritus. Mr. Monty J. Bennett servesdirectors.
Each of the persons nominated as
director who receives a majority vote at the
Chief Executive Officer of Remington. This proxy statement and accompanying proxyAnnual Meeting will
first be mailed to stockholders on or about April 25, 2016. At the annual meeting of stockholders, action will be taken to:
•elect seven directors to hold officeserve until the next annual meeting of stockholders and until their successors arehis or her successor is duly elected and qualified;
•ratifyqualified. Under the appointment of BDO USA, LLP, a national public accounting firm, as our independent auditors for the fiscal year ending December 31, 2016;
•obtain advisory approval of the company's executive compensation; and
•transact any other business that may properly come before the annual meeting of stockholders and any postponement or adjournment of the annual meeting.
FORWARD-LOOKING STATEMENTS
Certain statements and assumptions in this proxy statement contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, our business and investment strategy, our understandingterms of our competition, current market trends and opportunities, and projected capital expenditures. Such statements are subject to numerous assumptions and uncertainties, manybylaws, in uncontested elections of which are outsidedirectors of our control.
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These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: general volatility of the capital markets and the market price of our common and preferred stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or local economic conditions; the degree and nature of our competition; actual and potential conflicts of interest with our advisor, Remington, our executive officers and our non-independent directors; changes in governmental regulations, accounting rules, tax rates and similar matters; legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended, and related rules, regulations and interpretations governing the taxation of REITs; and limitations imposed on our business and our ability to satisfy complex rules in order for us to qualifyCompany, a nominee is elected as a REIT for federal income tax purposes. These and other risk factors are more fully discussed indirector by the section entitled "Risk Factors" in our Annual Report on Form 10-K, and from time to time, in Ashford's other filings with the Securities and Exchange Commission. The forward-looking statements included in this proxy statement are only made asaffirmative vote of the date of this proxy statement. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.
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GENERAL INFORMATION ABOUT VOTING
Solicitation of Proxies
The enclosed proxy is solicited by and on behalf of our board of directors. In addition to the solicitation of proxies by use of the mail, we expect that eight of our officers and other employees of our advisor may solicit the return of proxies by personal interview, telephone, e-mail or facsimile. We will not pay additional compensation to our officers or the employees of our advisor for their solicitation efforts, but we will reimburse them for any out-of-pocket expenses they incur in their solicitation efforts. We also intend to request persons holding shares of our common stock in their name or custody, or in the name of a nominee, to send proxy materials to their principals and request authority for the execution of the proxies, and we will reimburse such persons for their expense in doing so. We will bear the expense of soliciting proxies for the annual meeting of stockholders, including the cost of mailing.
We have retained MacKenzie Partners Inc. to aid in the solicitation of proxies and to verify records relating to the solicitation. MacKenzie will receive a base fee of $20,000, plus out-of-pocket expenses.
Voting Securities
Our only outstanding voting equity securities are shares of our common stock. Each share of common stock entitles the holder to one vote. As of April 14, 2016 there were 95,686,992 shares of common stock outstanding and entitled to vote. Only stockholders of record at the close of business on April 14, 2016 are entitled to notice of and to vote at the annual meeting of stockholders and any postponement or adjournment of the annual meeting.
Voting
If you hold your common stock in your own name as a holder of record, you may instruct the proxies to vote your common stock by signing, dating and mailing the proxy card in the postage-paid envelope provided. You may also vote your common stock in person at the annual meeting of stockholders.
If your common stock is held on your behalf by a broker, bank or other nominee, you will receive instructions from them that you must follow to have your common stock voted at the annual meeting of stockholders.
Counting of Votes
A quorum will be present at the annual meeting if the stockholders entitled to cast a majority of all the votes entitled to be cast at the annual meeting on any matter are present in person or by proxy. If you have returned valid proxy instructions or if you hold your shares in your own name as a holder of record and attend the annual meeting of stockholders in person, your shares will be counted for the purpose of determining whether there is a quorum. If a quorum is not present, the annual meeting of stockholders may be adjourned by the chairman of the meeting until a quorum has been obtained.
A nominee for director will be elected to the board of directors (Proposal 1) if the votes cast in the election for such nominee's election exceed the votes cast against such nominee's electionthat nominee (with abstentions and broker non-votes not counted as a vote cast either "for"for or "against"against that director'sdirector’s election). If at the meeting of stockholders at which such election occurs. Under our Corporate Governance Guidelines, if an incumbent director who is a nominee who is currently serving on the boardfor reelection does not receive the affirmative vote of the holders of a majority of the shares of common stock so voted in the election of directors, our corporate governance guidelines require thatfor such nominee, such incumbent director must promptly tender his or her resignation as a director for consideration by the nominating/corporate governance committeeNominating and Corporate Governance Committee of our Board and ultimate decision by the board forBoard. The Nominating and Corporate Governance Committee will promptly consider any such tendered resignation and will make a recommendation to our Board as to whether such tendered resignation should be accepted or rejected, or whether other action should be taken with respect to such offer to resign. Any incumbent director whose tendered resignation is under consideration may not participate in any deliberation or vote of the full boardNominating and Corporate Governance Committee or our Board regarding such tendered resignation. The Nominating and Corporate Governance Committee and our Board may consider any factors they deem relevant in deciding whether to accept, reject or take other action with respect to any such tendered resignation. Within 90 days after the date on which certification of the stockholder vote on the election of directors is made, our Board will publicly disclose its decision and rationale regarding whether to accept, reject or take other action with respect to the tendered resignation. If suchany incumbent director’s tendered resignation is not accepted by the board, then
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a vacancy is created on the board, which may be filled by the affirmative vote of a majority of the remaining directors then in office even if there is less than a quorum of the board of directors. Anyour Board, such director elected in accordance with the preceding sentence may hold office for the remainder of the one-year term of the directorship until his or her successor has been elected at the next annual meeting and qualified.
The affirmative vote of a majority of all of the votes cast at the annual meeting will be requiredcontinue to ratify the appointment of BDO USA, LLP as our independent auditors for the year ending December 31, 2016 (Proposal 2), for approval, on an advisory basis, of the executive compensation proposal (Proposal 3) and for any other matter that may properly come before the stockholders at the meeting.
If you are the beneficial owner of shares held in the name of a broker, trustee or other nominee and do not provide that broker, trustee or other nominee with voting instructions, your shares may constitute "broker non-votes." The election of directors (Proposal 1) and the advisory compensation proposal (Proposal 3) are non-discretionary items under the rules of the NYSE and may not be voted by brokers, banks or other nominees who have not received specific voting instructions from the beneficial owner of the shares. It is therefore important that you provide instructions to your broker so that your shares will be counted in the election of directors and the advisory compensation proposal. The ratification of the appointment of BDO USA, LLP as independent auditors (Proposal 2) is a discretionary item, and as such, banks, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
Abstentions and broker non-votes are included in determining whether a quorum is present as they are considered present and entitled to cast a vote (even if, in the case of broker non-votes, they are only entitled to vote on Proposal 2). Abstentions and broker non-votes will not be considered "votes cast" and therefore will not be included in vote totals and will not affect the outcome of the vote on Proposal 1 or Proposal 3. Abstentions will not be considered "votes cast" and therefore will not be included in vote totals and will not affect the outcome of the votes for Proposal 2.
If you sign and return your proxy card without giving specific voting instructions, your shares will be voted consistent with management recommendations.
Right to Revoke Proxy
If you hold shares of common stock in your own name as a holder of record, you may revoke your proxy instructions through any of the following methods:
•notify our Secretary in writing before your shares of common stock have been voted at the annual meeting of stockholders;
•sign, date and mail a new proxy card to Broadridge; or
•attend the annual meeting of stockholders and vote your shares of common stock in person.
You must meet the same deadline when revoking your proxy as when voting your proxy. See the "—Voting" section of this proxy statement for more information.
If shares of common stock are held on your behalf by a broker, bank or other nominee, you must contact them to receive instructions as to how you may revoke your proxy instructions.
Multiple Stockholders Sharing the Same Address
The Securities and Exchange Commission (the "SEC") rules allow for the delivery of a single copy of an annual report and proxy statement to two or more stockholders who share an address, unless we have received contrary instructions from one or more of the stockholders. We will deliver promptly
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upon written or oral request separate copies of our annual report and proxy statement to a stockholder at a shared address to which a single copy was delivered. Requests for additional copies of the proxy materials, and requests that in the future separate proxy materials be sent to stockholders who share an address, should be directed to Ashford Hospitality Trust, Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas, 75254 or by calling (972) 490-9600. In addition, stockholders who share a single address but receive multiple copies of the proxy materials may request that in the future they receive a single copy by contacting us at the address and phone number set forth in the previous sentence. Depending upon the practices of your broker, bank or other nominee, you may need to contact them directly to continue duplicate mailings to your household. If you wish to revoke your consent to householding, you must contact your broker, bank or other nominee. If you hold shares of common stock in your own name as a holder of record, householding will not apply to your shares.
If you wish to request extra copies, free of charge, of any annual report, proxy statement or information statement, please send your request to Ashford Hospitality Trust, Inc., Attention: Investor Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas, 75254 or call (972) 490-9600. You can also obtain copies from our web site atwww.ahtreit.com.
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PROPOSAL NUMBER ONE—ELECTION OF DIRECTORS
One of the purposes of the annual meeting of stockholders is to elect directors to hold office until the next annual meeting of stockholders and until their successors have been elected and qualified. Our nominating/corporate governance committee has recommended, and our board of directors has nominated, for re-election all seven persons currently serving as directors. If elected, each of the persons nominated as director will serve until the next annual meeting of stockholders and until their successors are dulyhis or her successor is elected and qualified.
qualified or his or her earlier death or resignation.
Set forth below are the names, principal occupations, committee memberships, ages, directorships held with other companies,
if any, and other biographical data for each of the
seveneight nominees for director, as well as the month and year each nominee first began his
or her service on our
board of directors.Board. For a discussion of
such person’s beneficial ownership
of our common stock, see the
"Security“Security Ownership of Management and Certain Beneficial Owners"Owners” section of this proxy statement.
If any nominee becomes unable to stand for election as a director, an event that our
board of directorsBoard does not presently expect, our
board of directorsBoard reserves the right to nominate substitute nominees prior to the meeting. In such a case, the
companyCompany will file an amended proxy statement that will identify
theeach substitute
nominees,nominee, disclose whether such
nominees havenominee has consented to being named in such revised proxy statement and to serve, if elected, and include such other disclosure relating to such
nomineesnominee as may be required under the Securities Exchange Act of 1934, as
amended.The board of directors unanimously recommends a vote FOR all nominees.
Nominees for Director
amended (the “Exchange Act”). | Our Board unanimously recommends a vote FOR all nominees. | |
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Nominees for Election as Directors | Age: 5057
Director since 2003
Committees:
• Acquisitions (chair) | | | Mr. Monty Bennett was electedfirst appointed to our board of directorsBoard in May 2003 and has served as Chairman of our Board since January 2013. He previously served as our Chief Executive Officer since that time. Effective in January 2013, Mr. Bennett was appointed as the Chairman of our board. Priorfrom May 2003 to January 2009, Mr. Bennett served as our President.February 2017. Mr. Bennett also currently serves as Chief Executive Officer and Chairmanchair of the Board of Directors of Ashford Inc., where he has served in such capacities since November 2014, and Ashford Prime, where he has served in such capacities since April 2013. our Acquisitions Committee.
Mr. Bennett serves asis also the Founder, Chairman of Ashford Investment Management, LLC ("AIM"), an investment fund platform and an indirect subsidiary of Ashford Inc. Mr. Bennett also is currently the Chief Executive Officer of Remington Holdings, LP.Ashford Inc. and is the Founder and Chairman of Braemar. Mr. Bennett joined Remington Hotel Corporation in 1992 and has served in several key positions, such as President, Executive Vice President, Director of Information Systems, General Manager and Operations Director. |
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| | Mr. Monty Bennett holds a Master's degree in Business Administration from the S.C. Johnson Graduate School of Management at Cornell University and a Bachelor of Science degree with distinction from the Cornell School of Hotel Administration. He is a life member of the Cornell Hotel Society. He has over 2025 years of experience in the hotel industry and has experience in virtually all aspects of the hospitality industry, including hotel ownership, finance, operations, development, asset management and project management. He isIn addition to his roles at Ashford, over his career Mr. Bennett has been a member of the American Hotel & Lodging Association's Industry Real Estate Finance Advisory Council (IREFAC), the Urban Land Institute's Hotel Council, and is on the Advisory Editorial Board for GlobalHotelNetwork.com. He is also a member of the CEO Fiscal Leadership Council for Fix the Debt, a non-partisan group dedicated to reducing the nation's federal debt level and on the advisory board of Texans for Education Reform. Formerly, Mr. Bennett was a member of Marriott's Owner Advisory Council and Hilton's Embassy Suites Franchise Advisory Council. leader in numerous industry associations.
Mr. Bennett is a frequent speakerlifelong advocate of civic engagement and panelisttakes pride in giving back to the Dallas-Fort Worth community. Together with the Ashford companies, he supports numerous charitable organizations including The Salvation Army, Habitat for various hotel development and industry conferences, includingHumanity, Metrocrest Services, the NYU Lodging ConferenceS.M. Wright Foundation and the Americas Lodging Investment Summit conferences. Special Olympics.
He holds a Master’s degree in Business Administration from Cornell’s S.C. Johnson Graduate School of Management and received a Bachelor of Science degree with distinction from the School of Hotel Administration also at Cornell. He is a life member of the Cornell Hotel Society.
Mr. Bennett received the Top-Performing CEO Award from HVS for 2011. This award is presented each year to the CEO in the hospitality industry who offers the best value to stockholders based on HVS's pay-for-performance model. The model compares financial results relative to CEO compensation, as well as stock appreciation, company growth and increases in EBITDA.
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| | Mr. Bennett'sBennett’s extensive industry experience as well as the strong and consistent leadership qualities he has displayed in his prior role as the Chief Executive Officer and a director of the company, Ashford PrimeCompany and his experience with, and knowledge of, the Company and its operations gained in those roles and in his role as Chief Executive Officer and director of Ashford Inc. since theits inception, of such entities are vital qualifications and skills that make him uniquely qualified to serve as a director of the Company and as the Chairman of the board. The Board believes that the company can more effectively execute its strategic initiatives at this time with Mr. Bennett in the role of Chairman and Chief Executive Officer. our Board. | |
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| Age: 4855
Director since 2009
Independent
Committees:
• Nominating and
Corporate Governance
• Acquisitions | | | Dr. Ansell was first elected to the board of directorsour Board in May 2009 and currently serves as our lead director and chairmana member of our compensation committee.Acquisitions Committee and as a member of our Nominating and Corporate Governance Committee. Dr. Ansell is the founder of and current Directordirector and Chairman of the Boardboard of the UCLA Executive Health Program, where he has been responsible for marketing and selling executive health program services to more than twenty20 Fortune 500 companies and over 4,000 individual customers. Dr. Ansell also founded and serves as the Directordirector of UCLA Medical Hospitality, which coordinates health services, concierge and some hospitality functions within the UCLA Health System. Dr. Ansell is also a senior practice physician within the UCLA Health System, specializing in cardiovascular disease prevention and early detection strategies. Over the past two decades, Dr. Ansell has acted as senior advisor to the pharmaceutical industry and financial community with respect to U.S. marketing, sales and branding strategies for cardiovascular medication. |
| |
Dr. Ansell received a dual undergraduate degree with distinction in Biology and as a College Scholar in Music from Cornell University, followed by his Doctor of Medicine from the UCLA School of Medicine. Dr. Ansell successfully completed the director certification program at the UCLA Anderson Graduate School of Management in 2009.
Dr. Ansell has significant entrepreneurial and management experience including brand development and positioning, sales and marketing, finance and establishing strategic relationships with both corporate and individual clients and customers. Additionally, Dr. Ansell successfully completed the director certification program at the UCLA Anderson Graduate School of Management in 2009.
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THOMAS E. CALLAHAN
Age: 60
| | Mr. Callahan was elected to the board of directors in December 2008 and currently serves as chairman of our audit committee and as a member of our compensation committee. Mr. Callahan is currently the National Practice Leader of CBRE Hotels and PKF Consulting USA, a CBRE Company, an international real estate advisory firm specializing in the hospitality industry, with responsibility for the overall operations and management of the company. He was previously Co-President and Chief Executive Officer of PKF Consulting USA. Prior to forming the predecessor to PKF Consulting USA, in 1992, Mr. Callahan was Deputy Managing Partner of Pannell Kerr Forster, an international public accounting firm specializing in the hospitality industry.
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| | Mr. Callahan has a wealth of knowledge and experience in the hospitality industry, involving economic, financial, operational, management and valuation experiences. In addition, Mr. Callahan has extensive experience in evaluating organizational structures, financial controls and management information systems. Mr. Callahan also has significant relationships and contacts in the hospitality industrycustomers that are beneficial in his service on the board. Board. With a 25-year career in academic and clinical internal medicine, Dr. Ansell is also able to advise the Board regarding the implications of and response to emerging bio-threats to the hospitality industry such as COVID-19. In addition, Dr. Ansell brings his experience with, and knowledge of, the Company and its operations gained as a director of the Company since May 2009 to his role as a director of the Company. | |
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AMISH GUPTA
| Age: 3643
Director since 2014
Independent Lead Director
Committees:
• Related Party
Transactions (chair)
• Acquisitions | | | Mr. Gupta was first elected to the board of directorsour Board in May 2014 and currently serves as a member of our audit and nominating/corporate governance committees.lead independent director (“Lead Director”). Mr. Gupta is currently serves as the chief operating officerManaging Partner of RETC, Limited Partnership, a property tax advisory firm that has represented over $20$40 billion in asset value nationally. He has led RETC since 2010, where he is responsible for overall operations and strategy. Additionally, Mr. Gupta founded Montfort Capital Partners (“MCP”), an asset management firm specializing in value-add real estate investments throughout the southern United States, where he serves as the Managing Partner. During this time, MCP has acquired or is under development for over $275 million in assets and secured a programmatic partnership with a national private equity firm. Prior to joining RETC, Mr. Gupta served as a real estate associate at Thethe Carlyle Group, a private equity firm headquartered in Washington D.C. with more than $189 billion in assets under management, for three years. |
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Mr. Gupta received his MBA from the Kellogg School of Management and his BAB.A. from Emory University.
Mr. Gupta'sGupta’s extensive real estate experience,knowledge, stemming from his experienceexperiences with the RETC, MCP, and the Carlyle Group, combined with his business acumen, will generate valuable insights into the economic environment of the real estate industry for the board.Board.
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| | | | 2023 Proxy Statement 7 | |
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| Chief Executive Officer
and President
Age: 45
Director since 2020 | | | Mr. Hays was appointed to our Board effective June 2020. He has served as our Chief Executive Officer and President since May 2020 and prior to that served as our Chief Strategy Officer since 2015 and our Senior Vice President-Corporate Finance and Strategy since 2010. He has been with our Company since 2005. Mr. Hays also currently serves as Senior Managing Director at Ashford Inc. and served on its board of directors until June 2020. Mr. Hays also previously served as Chief Strategy Officer for Braemar until May 2020. Prior to 2013, in addition to his other responsibilities, Mr. Hays was in charge of our investor relations group. Mr. Hays is a frequent speaker at industry and Wall Street investor conferences. Prior to joining our Company, Mr. Hays worked in the Corporate Development office of Dresser, Inc., a Dallas-based oil field service and manufacturing company, where he focused on mergers, acquisitions and strategic direction. Before working at Dresser, Mr. Hays was a member of the Merrill Lynch Global Power & Energy Investment Banking Group based in Texas.
Mr. Hays has been a frequent speaker at various lodging, real estate and alternative investment conferences around the globe. He earned his A.B. degree in Politics with a certificate in Political Economy from Princeton University and later studied philosophy at the Pontifical University of the Holy Cross in Rome, Italy.
Mr. Hays’ extensive industry experience as well as the strong and consistent leadership qualities he has displayed as Chief Executive Officer and President and as a director of the Company and his experience with, and knowledge of, the Company and its operations gained in such roles are vital qualifications and skills that make him uniquely qualified to serve as a director of the Company. | |
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| 8 | | | 2023 Proxy Statement | | | | |
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| Age: 4956
Director since 2013
Independent
Committees:
• Nominating and
Corporate Governance
(chair)
• Compensation | | | Mr. Jafarnia was appointed to the board of directorsour Board effective January 2013 and currently serves as chairmanchair of our nominating/corporate governance committeeNominating and Corporate Governance Committee and as a member of our compensation committee.Compensation Committee. Professionally, Mr. Jafarnia currently serves as General Counsel, Executive Vice President and Secretary of Lonsdale Investment Technology, Inc. In addition, effective May 2021, the Board of Trustees of Bluerock Total Income + Real Estate Fund appointed Mr. Jafarnia to serve as an Independent Trustee, and, since June 2019, he has served as a non-executive independent director of Bluerock Residential Growth REIT (NYSE American: BRG), a publicly listed REIT that focuses on the acquisition of multi-family apartment properties. Previously, Mr. Jafarnia served as General Counsel and Chief Compliance Officer at Artivest Holdings, Inc., which position he held from October 2018 until February 2021, and as Chief Compliance Officer of Altegris Advisers, LLC which was the adviser to the Altegris KKR Commitments Fund. Prior to that, Mr. Jafarnia served as Managing Director for Legal and Business Development at Provasi Capital Partners LP. Prior to that, from October 2014 to December 2017, he served as Senior Vice President of W.P. Carey Inc. (NYSE: WPC), as well as Senior Vice President and Chief Compliance Officer of Carey Credit Advisors, LLC. He is alsoInc. and as Chief Compliance Officer and General Counsel of Carey Financial, LLC. Mr. Jafarnia joined W. P. Carey Inc. in October of 2014 and currently serves as Senior Vice President. Prior to joining W. P. Carey Inc., heMr. Jafarnia served as Counsel to two American Lawyer Global 100 law firms in New York. From March 2014 to October 2014, heMr. Jafarnia served as Counsel in the REIT practice group at the law firm of Greenberg Traurig, LLP. From August 2012 to March 2014, Mr. Jafarnia served as Counsel in the Financial Services & Products Group and was a member of the REIT practice group of Alston & Bird, LLP. Before his tenure at these firms,Between 2006 and 2012, Mr. Jafarnia served as a senior executive, in-house counsel, and Chief Compliance Officer for several alternative investment program sponsors. Between 2008 and 2012, he served as counsel atsponsors, including, among others, American Realty Capital, a real estate investment program sponsor, and served as Chief Compliance Officer of its affiliated broker-dealer,broker- dealer, Realty Capital Securities, LLC. |
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| | Mr. Jafarnia received his JDJ.D. from Temple University School of Law and LLMLL.M. from Georgetown University. Mr. Jafarnia is a licensed attorney admitted to practice law in four states and the District of Columbia and has spent a majority of his career specifically as a regulatory compliance officer. He
Mr. Jafarnia has over 1623 years of experience in the real estate and financial services industry as an attorney, owner, principal, compliance officer and executive. His experience in these multiple roles provides unique perspectives and benefits to the board,Board, including specifically with respect to regulatory compliance. Mr. Jafarnia also has and maintains numerous relationships in the real estate industry that may be beneficial to his service on the board.Board. In addition, Mr. Jafarnia brings his experience with, and knowledge of, the Company and its operations gained as a director of the Company since January 2013 to his role as a director of the Company. | |
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PHILIP S. PAYNE
| | | | 2023 Proxy Statement 9 | |
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| Age: 6478
Director since 2016
Independent
Committees:
• Compensation
• Audit
• Nominating and
Corporate Governance
Audit Committee
Financial Expert | | | Mr. PayneKleisner was electedappointed to our Board in September 2016. Mr. Kleisner held a long illustrious career in the industry, serving as President and a director of Hard Rock Hotel Holdings, LLC, a destination casino and resort company, from October 2007 until March 2011. He also served as Chief Executive Officer of Morgans Hotel Group Co. (NASDAQ: MHGC), a hospitality company, from December 2007 until March 2011, as President and Chief Executive Officer (including interim President and Chief Executive Officer) from September 2007 until March 2009, and as a director from February 2006 to March 2011. Prior to his time at Morgans, Mr. Kleisner was the Chairman and Chief Executive Officer of Rex Advisors, LLC, a hotel advisory firm, from January 2006 to September 2007. From August 1999 to December 2005, Mr. Kleisner served as President, Chief Operating Officer and, from March 2000 to August 2005, Chairman, President and Chief Executive Officer of Wyndham International, Inc., a global hotel company. Mr. Kleisner also has served as Chairman of Wyndham International’s board from October 2000 to August 2005. He served as President and Chief Operating Officer of directorsThe Americas for Starwood Hotels & Resorts Worldwide, Inc. Hotel Group from January 1998 to August 1999. He has held senior positions with Westin Hotels and Resorts Worldwide, where he served as President and Chief Operating Officer from 1995 to 1998; Interstate Hotels Company, where he served as Executive Vice President and Group President of Operations from 1990 to 1995; the ITT Sheraton Corporation, where he served as Senior Vice President, Director of Operations, North America Division-East from 1985 to 1990; and Hilton Hotels Corp., where for 16+ years he served as General Manager or Managing Director of several landmark hotels.
Mr. Kleisner served as a director of Caesars Entertainment Corporation (NASDAQ: CZR) from 2013 to October 2017, Kindred Healthcare, Inc. (NYSE: KND) from 2009 to July 2018, and Apollo Residential Mortgage, Inc. (formerly NYSE: AMTG), a real estate investment trust, from July 2011 to August 2016. From November 2007 to August 2010, Mr. Kleisner served as a director of Innkeepers USA Trust, a subsidiary of Apollo Investment Corporation (NASDAQ: AINV). He is currently a director of Athora Holdings, Ltd., a specialist solutions provider for the European insurance and reinsurance market; European Gtd. Life & Reinsurance Co; Playtime, LLC, a manufacturer of antibacterial and antimicrobial playground equipment and play systems from 2018 to 2021; and Aimbridge Hospitality, Inc., a hotel investment and management firm from 2017 to 2019.
Mr. Kleisner graduated from Michigan State University with a B.A. in August 2003Hotel Management, and currently serves as a Real Estate Investment Management Advisory Board member of Michigan State University’s Eli Broad College of Business, School of Hospitality Business. He also completed advanced studies at the University of Virginia, Darden School of Business and attended the Catholic University of America.
Mr. Kleisner’s extensive, impressive experience in the management and operation of companies in the hospitality industry enables him to provide the Board with a wealth of knowledge regarding operational issues facing companies in the hospitality industry and a business acumen essential to guiding the Company’s strategy. | |
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| Age: 66
Director since 2016
Independent
Committees:
• Audit (chair)
• Related Party
Transactions
Audit Committee
Financial Expert | | | Ms. Pantermuehl was first elected to our Board in May 2018 and currently serves as the chair of our Audit Committee and as a member of our audit committee. Mr. Payne is currentlyRelated Party Transactions Committee. Ms. Pantermuehl has served as the Chief ExecutiveFinancial Officer of Ginkgo Residential, LLC. Ginkgo Residential was formed in July 2010 to assume all of the property management activities of Babcock & Brown Residential ofAlan Ritchey, Inc. since May 2015, which Mr. Payne was the CEO. Ginkgo Residential is primarily involvedhas operations in the acquisition, managementtransportation and substantial rehabilitationagriculture segments. From February 2011 to April 2015, Ms. Pantermuehl performed back office functions and acted as the Chief Financial Officer for a number of middle market multi-family properties in the southern United States. Priorsmall to joining Babcock & Brown Residential, Mr. Payne was the Chairman of BNP Residential Properties Trust,medium size firms, including a publicly traded real estate investment trust that was acquired by Babcock & Brown Ltd,software development/document imaging firm and a publicly traded Australian investment bank, in 2007. Mr. Payne joined BNP Residential in 1990bio-technology firm. From April 2007 to January 2011, Ms. Pantermuehl served as Vice President Capital Market Activities and became Executive Vice PresidentController and Chief Financial Officer in January 1993. He was named Treasurer in April 1995, a director in December 1997, and was elected Chairman in 2004. From 2007 until 2009, Mr. Payneof Riptide Worldwide, Inc. Prior to that, Ms. Pantermuehl served as a directorthe Chief Financial Officer of Meruelo Maddux Properties, a publicly traded company that focused on residential, commercialIntrametrics Corporation and industrial developmentVertical Computer Systems, Inc., and redevelopment in southern California. Mr. Payneas Director of Finance of Blockbuster, Inc. Ms. Pantermuehl is a former Treasurer and member of the Urban Land Institute, founding chairman of ULI's Responsible Property Investing Council and is former co-chairman of ULI's Climate, Land Use and Energy Group and also serves on the board of advisors for ULI's Center for Sustainability. Mr. Payne is alsodirectors of the Arthritis Foundation.
Ms. Pantermuehl received a memberbachelor’s degree in Business Administration with an emphasis in Accounting and Finance from Texas A&M University and graduated magna cum laude.
As a financial executive with over 27 years of National Multi Housing Council. |
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| | Mr. Payne has extensive knowledge and experience in real estate, finance, and the real estate financial reporting process. He has been involved in real estate and public company activities and reporting for more than 20 years. He has experience as a chairman of the board, chief financial officer, board memberofficer/controller of different companies and chairman ofan innovative leader with significant successes in reducing operational costs and implementing effective strategies for business growth, Ms. Pantermuehl brings a valuable perspective on financial and related matters to the audit committee of a publicly traded company and has served in a variety of roles at various private real estate companies, including principal, chief executive officer, chairman of the board and chief executive officer. Board. | |
| Age: 7076
Director since 2013
Independent
Committees:
• Compensation (chair)
• Audit
• Related Party
Transactions
Audit Committee
Financial Expert | | | Mr. Tallis has served on our boardBoard since his appointment in January 2013. Mr. Tallis currently serves as the chair of our Compensation Committee and as a member of our Audit Committee and Related Party Transactions Committee. Mr. Tallis is currently principal of Alan L. Tallis & Associates, a consulting firm principally engaged in serving the lodging industry.industry and providing litigation support. Mr. Tallis was appointed to the Advisory Board of Stonehill Strategic Hotel Credit Opportunity Fund II in 2008 and currently serves on a number of Advisory Boards for ownership and debt funds sponsored by or through Peachtree Hotel Group. From March 2008 through February 2011, Mr. Tallis served as Executive Vice President, Asset Management for our company,Company, and from February 2011 through January 2012, Mr. Tallis served as a consultant to our company.Company. From June 2006 to May 2007, Mr. Tallis served as a senior advisor to Blackstone Real Estate Advisors following its acquisition of La Quinta Corporation. From July 2000 until May 2006, Mr. Tallis served in various positions with La Quinta Corporation, most recently serving as President and Chief Development Officer of LQ Management LLC and President of La Quinta Franchising LLC. Prior to joining La Quinta Corporation, Mr. Tallis held various positions with Red Roof Inns, including serving as Executive Vice President—President-Chief Development Officer and General Counsel from 1994 to 1999. |
| | Mr. Tallis received an MBA from the Red McCombs School of Business at the University of Texas at Austin and a J.D. from the University of Miami.
Mr. Tallis has over 3043 years of experience in the lodging industry.industry, including his responsibility for the growth of both of La Quinta Inns and Red Roof Inns. His diverse experience has included extensive transaction work, brand management and brand relations. In addition to his extensive experience in the lodging industry, Mr. Tallis'Tallis’ service with our company,Company, first as our Executive Vice President, Asset Management and then as a consultant and as a director of the Company, allows him to bring a valuable perspective to the board.Board. | |
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| | | | 2023 Proxy Statement 11 | |
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TableSummary of
Contents
BOARD OF DIRECTORS AND COMMITTEE MEMBERSHIP
Director Qualifications, Skills, Attributes and Experience
Our
business is managed throughNominating and Corporate Governance Committee and the
oversightfull Board believe a complementary mix of diverse qualifications, skills, attributes, and
direction of our board of directors. Members of our board of directors are kept informed of our business through discussions withexperiences will best serve the
chairman of the board of directors and chief executive officer, lead director and other officers, by reviewing materials provided to them and by participating in meetings of our board of directorsCompany and its
committees. During the year ended December 31, 2015, our board of directors held four regular meetings and twelve special meetings. All directors standing for re-election attended, in person or by telephone, at least 75 percent of all meetings of our board of directors and committees on which such director served, held during the period for which such person was a director.
Attendance at Annual Meeting of Stockholders
In keeping with our corporate governance principles, directors are expected to attend the annual meeting of stockholders in person. All persons who were directors at our 2015 annual meeting of stockholders attended our 2015 annual meeting.
Board Member Independence
stockholders. The "Independence Tests" set forth in Section 303A.02 of the NYSE Listed Company Manual describe the requirements for a director to be deemed independent by the NYSE, including the requirement of an affirmative determination by our board of directors that the director has no material relationship with us that would impair independence. The full text of our board of director's Corporate Governance Guidelines can be found in the Investor Relations section of our website atwww.ahtreit.com by clicking "INVESTOR," then "Governance Documents," and then "Corporate Governance Guidelines." In determining whether anysummary of our director nominees has a material relationship with usnominees’ qualifications, skills, attributes, and experiences that would impair independence,appears below, and the related narrative for each director nominee appearing in the directors’ biographies above, notes some of the specific experience, qualifications, attributes, and skills for each director that our board of directors reviewed both the NYSE Listed Company Manual requirements on independence as well as our own Corporate Governance Guidelines. Our Corporate Governance Guidelines provideBoard considers important in determining that if any director receives more than $120,000 per year in compensation from the company, exclusive of director and committee fees, he or she will not be considered independent. Our board of directors has affirmatively determined that, with the exception of Mr. Monty Bennett, our Chairman and Chief Executive Officer, each nominee should serve on the Board in light of the Company’s business, structure, and strategic direction. The absence of a checkmark for a particular skill does not mean the director in question is independent of Ashford and its management under the standards set forth in our Corporate Governance Guidelines and the NYSE Listed Company Manual.
In making the independence determinations with respectunable to our current directors, our board of directors examined relationships between each of our directors or their affiliates and Ashford or its affiliates, including those reported below under the heading "Certain Relationships and Related Party Transactions" on page 51 of this proxy statement and four additional transactions that did not risecontribute to the level of a reportable related party transaction but were taken into consideration by our board of directorsdecision-making process in making independence determinations. Two of the additional transactions reviewed by our board of directors involved Dr. Ansell. Dr. Ansell is founder, director and chairman of the board of the UCLA Executive Health Program, which is part of the UCLA Medical Center; Regents of the University of California. The Regents of the University of California have received payments totaling $18,245 from us for medical services provided to officers of the company from 2013 through 2015, which included payments of $2,703, $8,660 and $6,882 in 2013, 2014 and 2015, respectively. Additionally, Dr. Ansell holds a 5.6% limited partnership interest in Seguin Land Investments, LP, a limited partnership in which Mr. Monty Bennett is also a limited partner. The board also considered an agreement between the corporation and RETC, Limited Partnership, a property tax advisory firm for which Mr. Gupta currently serves as chief operating officer, pursuant to which RETC serves as property tax agent on one of our properties located in Plano, Texas in exchange for a contingency fee
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not to exceed $7,500. Finally, the board considered Mr. Tallis' prior services as an executive officer of the company but noted that such service ended over three years ago, with no compensation for such service being paid to Mr. Tallis in the three years preceding his independence consideration. Our board of directors determined that none of these transactions impaired the independence of the directors involved. As a result of such analysis and independence determinations, our board of directors is comprised of a majority of independent directors, as required in Section 303A.01 of the NYSE Listed Company Manual. Any reference to an independent director herein means such director satisfies the independence tests set forth in the NYSE Listed Company Manual.
Board Committees and Meetings
Historically, the standing committees of our board of directors have been the audit committee, the compensation committee and the nominating/corporate governance committee. Each of these committees has a written charter approved by our board of directors. A copy of each charter can be found in the Investor section of our website atwww.ahtreit.com by clicking "INVESTOR" and then "Governance Documents." The committee members who currently serve on each active committee and a description of the principal responsibilities of each such committee follows:
area.
(1)
| Mr. Hays does not subscribe to certain notions of gender and therefore chose to identify as “Other” rather than Male or Female. |
| | | | | | |
| | Audit | | Compensation | | Nominating/
Corporate
Governance |
---|
Benjamin J. Ansell, M.D. | | | | Chair | | |
Monty J. Bennett | 12 | | | 2023 Proxy Statement | | |
Thomas E. Callahan | | Chair | | X | | |
Amish Gupta | | X | | | | X |
Kamal Jafarnia | | | | X | | Chair |
Philip S. Payne | | X | | | | |
Allan L. Tallis | | | | | | |
Theaudit committee is, and at all times during 2015 was, composed entirely of three independent directors. The audit committee met six times during 2015. This committee's purpose is to provide assistance to our board of directors in fulfilling their oversight responsibilities relating to:
•the integrity of our financial statements;
•our compliance with legal and regulatory requirements;
•the independent auditor's qualifications and independence; and
•the performance of our internal audit function and independent auditors.
Our board of directors has determined that each of Messrs. Callahan and Payne are "audit committee financial experts," as defined in the applicable rules and regulations of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and all of the members of our audit committee are "financially literate" under NYSE listing standards.
Thecompensation committee is, and at all times during 2015 was, composed of three independent directors. The compensation committee met four times during 2015. This committee's purpose is to:
•discharge responsibilities of the board of directors relating to compensation of our executives;
•review and discuss with management the Compensation Discussion & Analysis and recommend to the board of directors its inclusion in our proxy statement or annual report on Form 10-K;
•produce an annual report on executive compensation for inclusion in our proxy statement; and
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•oversee and advise the board of directors on the adoption of policies that govern our compensation programs, including stock and benefit plans.
Thenominating/corporate governance committee is, and at all times during 2015 was, composed of two independent directors. The committee met three times during 2015. This committee's purpose is to:
•identify individuals qualified to become members of our board of directors;
•recommend that our board of directors select the director nominees for the next annual meeting of stockholders;
•identify and recommend candidates to fill vacancies occurring between annual stockholder meetings; and
•develop and implement our Corporate Governance Guidelines.
Compensation Committee Interlocks and Insider Participation
During 2015, Dr. Ansell and Messrs. Callahan and Jafarnia served on our compensation committee. None of these directors is or has ever been an officer or employee of our company. None of our executive officers serves, or during 2015 served, as (i) a member of a compensation committee (or board committee performing equivalent functions) of any entity, one of whose executive officers served as a director on our board or as a member of our compensation committee, or (ii) a director of another entity, one of whose executive officers served or serves on our compensation committee. No member of the compensation committee had any relationship with the company requiring disclosure as a related party transaction in the section "Certain Relationships and Related Party Transactions" of this proxy statement.
Director Compensation
The table below reflects the compensation we paid to each of our non-employee directors for serving on our board of directors for the fiscal year ended December 31, 2015. Our chief executive officer, who is also the chairman of our board, did not receive additional compensation for his service as a director.
| | | | | | | | | | |
Name | | Fees Earned or Paid in Cash | | Stock Awards/LTIP(1) | | Total | |
---|
Benjamin J. Ansell, M.D. | | $ | 160,500 | | $ | 95,523 | | $ | 256,023 | |
Thomas E. Callahan | | | 120,500 | | | 90,000 | | | 210,500 | |
Amish Gupta | | | 97,000 | | | 95,523 | | | 192,523 | |
Kamal Jafarnia | | | 105,500 | | | 95,523 | | | 201,023 | |
Philip S. Payne | | | 99,000 | | | 90,000 | | | 189,000 | |
Allan L. Tallis | | | 95,500 | | | 95,523 | | | 191,023 | |
(1)Each independent director was granted 10,000 shares of our common stock in 2015. Dr. Ansell and Messrs. Gupta, Jafarnia and Tallis each elected to receive long-term incentive partnership units, or "LTIP units," in our operating partnership instead of shares of our common stock, which required a $0.05 per unit capital contribution to our operating partnership and which were grossed up by conversion factor.
The current compensation of our non-employee directors consists of the following elements:
•an annual board retainer of $90,000 for all non-employee directors;
•an additional annual board retainer of $50,000 for the lead director;
•an additional annual board retainer of $25,000 for the chairman of our audit committee;
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•an additional annual board retainer of $5,000 for each member of our audit committee other than the chairman;
•an additional annual board retainer of $15,000 for the chairman of our compensation committee;
•an additional annual board retainer of $10,000 for the chairman of our nominating/corporate governance committee;
•an annual grant to each non-employee director of immediately vested equity shares having a value of $90,000, in the form of shares of our common stock or long-term incentive partnership units in our operating partnership, at the election of each director; and
•additional cash retainers from time to time to non-employee directors for their service on special committees.
We do not pay meeting fees to any of our directors. We have historically reimbursed and will continue to reimburse all directors for reasonable out-of-pocket expenses incurred in connection with their services on the board of directors.
The equity compensation policy for our non-employee directors provides that each director receives equity grants following each annual meeting. These grants will be fully vested immediately upon grant. In accordance with this policy, we granted 10,000 shares of fully vested common stock or LTIPs to each of our non-employee directors in May 2015.
When the board combined the role of chairman and chief executive officer in January 2013, we entered into a chairman emeritus agreement with our former chairman, Mr. Archie Bennett, Jr., pursuant to which he currently serves in the advisory, non-executive position of chairman emeritus. Mr. Archie Bennett, Jr. is not a voting member of our board nor is he an executive officer of the company. In recognition for his past service to the company and in consideration for his continued service as chairman emeritus, we agreed to continue to pay him a lifetime stipend of $700,000 per year. Mr. Archie Bennett, Jr. remains eligible for all benefits that were previously available to him when he served as our chairman, including continued eligibility for equity grants, medical, dental, vision, pension, 401(k), accident, disability and life insurance as well as reimbursement for reasonable expenses incurred by him in connection with his service to the company. Pursuant to the terms of our advisory agreement, Ashford Inc. is obligated to reimburse us for all costs associated with Mr. Archie Bennett's service as our chairman emeritus, including his annual stipend and the cost of all benefits available to him.
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CORPORATE GOVERNANCE PRINCIPLES
The board
Our Board is committed to
good corporate governance practices that promote the long-term
interestinterests of
shareholders.our stockholders. The
boardBoard regularly reviews developments in corporate governance and updates the
company'sCompany’s corporate governance framework, including its corporate governance policies and guidelines, as it deems necessary and appropriate. Our policies and practices reflect corporate governance initiatives that
are compliantcomply with the listing requirements of the NYSE and the corporate governance requirements of the Sarbanes-Oxley Act of 2002. We maintain a corporate governance section on our website, which includes key information about our corporate governance initiatives including our Corporate Governance Guidelines, charters for the committees of our
board of directors,Board, our Code of Business Conduct and Ethics and our Code of Ethics for the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The corporate governance section can be found on our website at
www.ahtreit.com by clicking "INVESTOR"the “Investor” tab, then the “Corporate Governance” tab, and then "Governance Documents." Each director should perform,the “Governance Documents” link.
Code of Business Conduct and Ethics Our Code of Business Conduct and Ethics applies to each of our directors and officers (including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and our Executive Vice President, General Counsel and Secretary (or their respective successors)) and employees. The term “officers and employees” includes individuals who (i) are employed directly by us, if any (we do not currently employ any employees) or (ii) are employed by Ashford Inc., our advisor or their subsidiaries and (a) have been named one of our officers by our Board or (b) have been designated as subject to the bestCode of his ability,Business Conduct and Ethics by the dutieslegal department of a director,our advisor. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:
honest and ethical conduct, including the duties as a memberethical handling of a committeeactual or apparent conflicts of interest;
full, fair, accurate, timely and understandable disclosure in our reports filed with the SEC and our other public communications;
compliance with applicable governmental laws, rules and regulations;
prompt internal reporting of violations of the code to appropriate persons identified in the code;
protection of Company assets, including corporate opportunities and confidential information; and
accountability for compliance to the code.
Any waiver of the Code of Business Conduct and Ethics for our executive officers or directors may be made only by our Board or one of our boardBoard committees and will be promptly disclosed if and to the extent required by law or stock exchange regulations.
Board Leadership Structure Our Board regularly considers the optimal leadership structure for the Company and its stockholders. In making decisions related to our leadership structure, the Board considers many factors, including the specific needs of directorsthe Company in good faith, inlight of its current strategic initiatives and the best interests of stockholders.
To further minimize the potential for future conflicts of interest, our bylaws and our Corporate Governance Guidelines, as well as the NYSE rules applicable to its listed companies, require that the Board must maintain a majority of independent directors at all times, and our Corporate Governance Guidelines require that if the Chairman of the Board is not an independent director, at least two-thirds of the directors must be independent. Currently, all of our directors other than Mr. Monty J. Bennett and Mr. Hays are independent directors. Our Board must also comply with each of our conflict of interest policies discussed in “Certain Relationships and Related Person Transactions-Conflict of Interest Policies.” Our bylaw provisions, governance policies and conflicts of interest policies are designed to provide a strong and independent board and ensure independent director input and control over matters involving potential conflicts of interest.
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In 2019, our Board appointed Amish V. Gupta to serve as the Lead Director for a one-year term. In 2020, 2021 and 2022, our Board re-appointed Mr. Gupta to serve as the Lead Director for an additional one-year term. Under our Corporate Governance Guidelines, the Lead Director has the following duties and responsibilities:
preside at all executive sessions of the independent or non-employee directors of the Company;
advise Chairman of the Board and Chief Executive Officer of decisions reached and suggestions made at meetings of independent directors or non-employee directors;
serve as liaison between the Chairman of the Board and the independent directors;
approve information sent to the Board;
approve meeting agendas for the Board;
approve meeting schedules to assure that there is sufficient time for discussion of all agenda items;
authorize the calling of meetings of the independent directors; and
if requested by major stockholders, be available for consultation and direct communication.
Our Board believes that our leadership structure provides a very well-functioning and effective balance between strong company leadership and appropriate safeguards and oversight by independent directors.
Subject to the advisory agreement entered into by the Company, Ashford Inc., Ashford Hospitality Limited Partnership (“AHLP”), Ashford TRS Corporation and Ashford LLC, as amended from time to time (the “advisory agreement”), the business and affairs of the Company are managed by or under the direction of our Board in accordance with Maryland law. Our Board provides direction to, and oversight of, management of the Company. In addition, our Board establishes the strategic direction of the Company and oversees the performance of the Company’s business, management and the employees of our advisor who provide services to the Company. Subject to our Board’s supervision, our advisor is responsible for the day-to-day operations of the Company and is required to make available sufficient experience and appropriate personnel to serve as executive officers of the Company. The management of the Company is responsible for presenting business objectives, opportunities and/or strategic plans to our Board for review and approval and for implementing the Company’s strategic direction and the Board’s directives.
Strategy
Our Board recognizes the importance of ensuring that our overall business strategy is designed to create long-term value for our stockholders and maintains an active oversight role in formulating, planning and implementing the Company’s strategy. Our Board regularly considers the progress of, and challenges to, the Company’s strategy and related risks throughout the year. At each regularly-scheduled Board meeting, the management and the Board discuss strategic and other significant business developments since the last meeting and the Board considers, recommends and approves changes, if any, in strategies for the Company.
Risk Oversight
Our full Board has ultimate responsibility for risk oversight, but the committees of our Board help oversee risk in areas over which they have responsibility. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the Company’s business strategy. Our Board and the Board committees receive regular updates related to various risks for both our Company and our industry. The Audit Committee regularly receives and discusses reports from members of management who are involved in the risk assessment and risk management functions of our Company. The Compensation Committee annually reviews the overall structure of our equity compensation programs to ensure that those programs do not encourage executives to take unnecessary or excessive risks.
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Succession Planning
Our Board, acting through the Nominating and Corporate Governance Committee, has reviewed and concurred in a management succession plan, developed by our advisor in consultation with the care that an ordinarily prudent personChairman, to ensure continuity in a like position would use under similar circumstances. Directors are expected to attend all meetings of our board of directors and meetings of committeessenior management. This plan, on which they serve. Directors arethe Chief Executive Officer is to report to the Board from time to time, addresses:
emergency Chief Executive Officer succession;
Chief Executive Officer succession in the ordinary course of business; and
succession for the other members of senior management.
The plan also expectedincludes an assessment of senior management experience, performance, skills and planned career paths.
On January 15, 2021, the Company entered into a credit agreement with certain funds and accounts managed by Oaktree Capital Management, L.P. (“Oaktree”). In connection with the transactions contemplated by the credit agreement, on January 15, 2021, Ashford Trust entered into an Investor Agreement (the “Investor Agreement”) with Oaktree. The Investor Agreement, among other things, provides Oaktree the right to attendappoint two observers to the annual meetingBoard, until such time, and subject to certain limitations, as more fully described in the Investor Agreement.
In addition to ensuring the Board reflects an appropriate mix of
our stockholders. Our nominating/experiences, qualifications, attributes and skills, the Nominating and Corporate Governance Committee also focuses on director succession. Recently, based on consideration of best corporate governance committee is responsible for seeking, consideringpractices and recommending toupon the board of directors qualified candidates for election as directors and recommending a slate of nominees for election as directors at the annual meeting of stockholders. It also periodically prepares and submits to the board for adoption the nominating/corporate governance committee's selection criteria for director nominees. Before recommending an incumbent, replacement or additional director, our nominating/corporate governance committee reviews his or her qualifications, including personal and professional integrity, capability, judgment, availability to serve, conflicts of interest, ability to act on behalf of stockholders and other relevant factors. While the committee does not have a specific policy concerning diversity, it does consider potential benefits that may be achieved through diversity in viewpoint, professional experience, education and skills. The committee reviews and makes recommendations on matters involving general operationrecommendation of the board of directorsNominating and our corporate governance, and, at least annually, it recommendsCorporate Governance Committee, the Board amended its Corporate Governance Guidelines to remove the board of directors nominees for each committee of the board. In addition, our nominating/corporate governance committee annually facilitates the assessment of the board of directors' performance asrequirement that a whole and of the individual directors and reports thereon to the board. Our nominating/corporate governance committee has the sole authority to retain and terminate any search firm to be used to identify director, candidates. Stockholders wishing to recommend director candidates for consideration by the committee can do so by following the procedures set forth below in the "Stockholder Procedures for Recommending Candidates for Director" section of this proxy statement. The nominating/corporate governance committee evaluates a candidate, generally, using the criteria set forth above without regard to who nominated the candidate and will consider candidates recommended by stockholders provided that stockholders follow the procedure for submitting recommendations.
Our board of directors does not prohibit its members from serving on boards and/or committees of other organizations, and our board of directors has not adopted guidelines limiting such activities. The nominating/corporate governance committee and our board of directors will take into account the nature of, and time involved in, a director's service on other boards when evaluating the suitability of individual directors and when making its recommendations for inclusion in the slate of directors to be submitted to stockholders for election at the annual meeting of our stockholders.
In October 2015, our board of directors amended the corporate governance guidelines to prohibit pledging of any stock held by our directors or executive officers. Additionally, we revised our code of
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ethics to prohibit pledging of any stock held by our employees. Our board also approved amendments to our bylaws requiring majority approval for all uncontested director elections, consistent with the proposal approved by shareholders in our 2015 annual meeting, and requiring shareholder approval of any shareholder rights plan with a term exceeding twelve months.
Additionally, upon attaining the age of 70 and annually thereafter, as well as when a director's principal occupation or business association changes substantially froman individual who would be 70 years of age at the position hetime of his or she held when originally invited to join the board,her election as a director, may not serve on the Board unless the Board waives such limitation.
Director Nomination Procedures by the Company The Nominating and Corporate Governance Committee recommends qualified candidates for Board membership based on the following criteria:
integrity, experience, achievements, judgment, intelligence, competence, personal character, expertise, skills, knowledge useful to the oversight of the Company’s business, ability to make independent analytical inquiries, willingness to devote adequate time to board duties and likelihood of a sustained period of service on the Board;
business or other relevant experience; and
the extent to which the interplay of the candidate’s expertise, skills, knowledge and experience with that of other board members will tenderbuild a letterboard that is effective, collegial and responsive to the needs of proposed retirement or resignation, as applicable,the Company.
In connection with the merit-based selection of nominees for director, the Board has regard for the need to consider director candidates from
different and diverse backgrounds, including sex, race, color, ethnicity, age and geography. Consideration will also be given to the Board’s desire for an overall balance of professional diversity, including background, experience, perspective, viewpoint, education and skills. In early 2018, our
boardBoard approved specific amendments to the “Selection of Directors” section of our Corporate Governance Guidelines to more specifically include diversity of sex, race, color, ethnicity, age and geography when considering director candidates. The Board, taking into consideration the recommendations of the Nominating and Corporate Governance Committee, is responsible for selecting the director nominees for election by the stockholders and for appointing directors to the
chairpersonBoard between annual meetings to fill vacancies, with primary emphasis on the criteria set forth above. The Board and the Nominating and Corporate Governance Committee assess the effectiveness of
our nominating/corporate governance committee. Our nominating/corporate governance committee will review the
director's continuation on ourBoard’s diversity efforts as part of the annual board
of directors, and recommend to the board whether, in light of all the circumstances, our board should accept such proposed resignation or request that the director continue to serve. In January 2016, Mr. Tallis tendered a letter of proposed retirement from the board upon attaining the age of 70 on April 16, 2016. Our nominating/corporate governance committee reviewed Mr. Tallis' qualifications as a board member, including his more than 30 years of experience in the lodging industry and his diverse experience in extensive transaction work, brand management and brand relations. The committee determined that Mr. Tallis' extensive experience in the lodging industry, including his past service as an officer of our company, adds a valuable perspective to the board and determined not to accept Mr. Tallis' proposed retirement.
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OTHER GOVERNANCE INFORMATION
Stockholder Procedures for Recommending Candidates for Director
Nominations
Our bylaws permit stockholders to nominate
director candidates for
considerationelection as directors of the Company at an annual meeting of stockholders. Stockholders wishing to nominate director candidates can do so by
writingproviding a written notice to
David A. Brooks,the Corporate Secretary, Ashford Hospitality Trust, Inc., 14185 Dallas Parkway, Suite
1100,1200, Dallas, Texas
75254, giving75254. Stockholder nomination notices and the
information required in our Bylaws, including, among other things, the candidate's name, sufficient biographical data and qualifications. Stockholder nominationsaccompanying certificate, as described below, must be received
betweenby the Corporate Secretary not earlier than November 29, 2023 and not later than 5:00 p.m., Eastern time, on December
26, 2016 and January 25, 201729, 2023 for the nominated individuals to be considered for candidacy at the
20172024 annual meeting of stockholders.
Such nomination notices must include all information regarding the proposed nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the proposed nominee as a director in an election contest pursuant to the SEC’s proxy rules under the Exchange Act, as well as certain other information regarding the proposed nominee, the stockholder nominating such proposed nominee and certain persons associated with such stockholder, and must be accompanied by a certificate of the nominating stockholder as to certain matters, all as prescribed in the Company’s bylaws. A detailed description of the information required to be included in such notice and the accompanying certificate is included in the Company’s bylaws. You may contact the Corporate Secretary at the address above to obtain a copy of the relevant bylaw provisions regarding the requirements for making stockholder nominations.
Stockholders may recommend director candidates for consideration by the nominating/corporate governance committee. Any such recommendation must include verification Failure of the stockholder statusnotice and certificate to comply fully with the requirements of the person submittingCompany’s bylaws in such regard will result in the recommendationstockholder nomination being invalid and the nominee's name and qualifications for board membership. Stockholder recommendations may be submitted by writing to David A. Brooks, Corporate Secretary, Ashford Hospitality Trust, Inc., 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 and must be received between December 26, 2016 and January 25, 2017 to be considered for candidacyelection of the proposed nominee as a director of the Company not being voted on at the 2017pertinent annual meeting of stockholders. The nominating/corporate governance committee expects to use a similar process to evaluate candidates recommended by stockholders as the one it uses to evaluate candidates otherwise identified by the committee.
Stockholder and Interested Party Communication with our Board of Directors
Stockholders and other interested parties who wish to contact any of our directors either individually or as a group may do so by writing to them c/o
David A. Brooks,the Corporate Secretary, Ashford Hospitality Trust, Inc., 14185 Dallas Parkway, Suite
1100,1200, Dallas, Texas 75254.
Stockholders'Stockholders’ and other interested
parties'parties’ letters are
screenedreviewed by
companyCompany personnel based on criteria established and maintained by our
nominating/corporate governance committee,Nominating and Corporate Governance Committee, which includes filtering out improper or irrelevant topics such as solicitations.
Meetings of Non-Employee Directors
Our board of directors must have at least two regularly scheduled meetings per year for the non-employee directors without management present. In 2015, the non-employee directors met eight times. At the non-employee directors' meetings, the non-employee directors review strategic issues for our board of directors' consideration, including future agendas, the flow of information to directors, management progression and succession, and our corporate governance guidelines. Dr. Ansell served as lead director during 2015. The lead director presides at all meetings of the non-employee directors and is responsible for advising the chief executive officer of decisions reached and suggestions made at these meetings. The lead director has the following duties and responsibilities:
•presides at all meetings of the board at which the chairman is not present and all executive sessions of the independent or non-employee directors;
•advises the chairman and chief executive officer of decisions reached and suggestions made at meetings of independent directors/non-employee directors;
•serves as liaison between the chairman and the independent directors;
•approves information sent to the board;
•approves meeting agendas for the board;
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•approves meeting schedules to assure that there is sufficient time for discussion of all agenda items;
•has the authority to call meetings of the independent directors; and
•if requested by major shareholders, ensures that he or she is available for consultation and direct communication.
Stockholders may communicate with the lead director or non-employee directors as a group by utilizing the communication process identified in the "Stockholder and Interested Party Communication with our Board of Directors" section of this proxy statement. If non-employee directors include a director that is not an independent director, then at least one of the scheduled meetings per year will include only independent directors.
Director Orientation and Continuing Education
Our
board of directorsBoard and senior management conduct a comprehensive orientation process for new directors to become familiar with our vision, strategic direction, core values including ethics, financial matters, corporate governance
policies and practices and other key policies and practices through a review of background material and meetings with senior management. Our
board of directorsBoard also recognizes the importance of continuing education for directors and is committed to providing education opportunities
in order to improve both our
board of directorsBoard’s and its
committees'committees’ performance. Senior management will assist in identifying and advising our directors about opportunities for continuing education, including conferences provided by independent third parties.
Director Change in Occupation Upon the time a director’s principal occupation or business association changes substantially from the position he or she held when originally invited to join the Board,
Leadership Structurea director is required to tender a letter of proposed resignation from our Board to the chair of our Nominating and
RoleCorporate Governance Committee. Our Nominating and Corporate Governance Committee, in
Risk Oversight Our board of directors hasconsultation with our Chairman, will review the flexibilitydirector’s continuation on our Board and recommend to determine the appropriate leadership structure for our company. In making decisions related to our leadership structure, specifically when determiningBoard whether, to have a joint chief executive officer and chairman or to separate these offices, the board considers many factors, including the specific needs of the company in light of its current strategic initiativesall the circumstances, our Board should accept such proposed resignation or request that the director continue to serve.
Hedging and
Pledging Policies We maintain a policy that prohibits our directors and executive officers from holding Company securities in a margin account or pledging Company securities as collateral for a loan. Our policy also prohibits our directors and executive officers from engaging in speculation with respect to Company securities, and specifically prohibits our executives from engaging in any short-term, speculative securities transactions involving Company securities and engaging in hedging transactions.
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BOARD OF DIRECTORS AND COMMITTEES Our business is managed through the best interestoversight and direction of stockholders. In 2015, Mr. Monty Bennett served asour Board. Members of our Board are kept informed of our business through discussions with the Chairman of the board as well asBoard, Chief Executive Officer, Lead Director and other officers, by reviewing materials provided to them and by participating in meetings of our Board and its committees.
The Board has retained Ashford Inc. and Ashford LLC to manage our operations and our portfolio of hotel assets, subject to the Board’s oversight and supervision and the terms and conditions of the company. In makingadvisory agreement. Because of the determinationconflicts of interest created by the relationships among us, Ashford Inc., Braemar, and any other related party, and each of their respective affiliates, many of the responsibilities of the Board have been delegated to continue to combineour independent directors, as discussed below and under “Certain Relationships and Related Person Transactions- Conflict of Interest Policies.”
During the
roleyear ended December 31, 2022, our Board held four regular meetings and our non-employee directors, each of
chairman and chief executive officer, the board considered the company's strategic initiatives, Mr. Monty Bennett's expertise in the hospitality industry, which he has developed over the last 20 years, and the company's superior performance, as evidenced by total stockholder return, during Mr. Bennett's tenure as Chief Executive Officer. The combined role of chairman and chief executive officerwhom is both counterbalanced and enhanced by an independent director, serving as the lead director, strong and active independent directors comprising more than two-thirds of our board, our fully independent committees and our corporate governance policies.held two meetings and/or executive sessions. Our board believes that combining the roles of chairman and chief executive officer is beneficial because it allows a single person to provide clear and unambiguous leadership and serve as an effective and efficient bridge between the board and management.
The board recognizes the potential conflicts of interest that could arise by having the same person serve as chairman of the board and chief executive officer and has taken the additional steps necessary to strengthen the board leadership structure by amending the corporate governance guidelines in 2013 to, among other things, provide the lead director with the specific duties and responsibilities outlined above. To further minimize the potential for future conflicts of interests the board must maintain a two-thirds majority of independent directors at all times and must also comply with each of the following existing policies to mitigate potential conflicts of interest:
•Our board of directorsBoard must hold at least two regularly scheduled meetings per year forof the non-employee directors without management present. All of our incumbent directors standing for re-election, other than Mr. Kleisner, attended, in person or by telephone, at least one75% of which must include only independent directors. At these
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meetings, the independent/non-employee directors review strategic issues for consideration by the full board of directors, including future agendas, the flow of information to directors, management progression and succession, and our corporate governance guidelines. These meetings also serve as the forum for the annual evaluation of the performance of the chief executive officer, the annual review of the chief executive officer's plan for management succession and the annual evaluation of the performance of the board. Dr. Ansell presides at theall meetings of non-employee directors as lead director.
•Our charterour Board and advisory agreement each contain a requirement that any transaction or agreement involving us, our wholly owned subsidiaries or our operating partnership andcommittees on which such director served, held during the period for which such person was a director or officer orwas a member of such committees, as applicable. Mr. Kleisner attended all meetings of our Board and of the Compensation Committee and the Nominating and Corporate Governance Committee, but, due to prior commitments, was unable to attend two of the five meetings of our Audit Committee.
Board Member Independence Our Board determines the independence of our directors in accordance with our Corporate Governance Guidelines and Section 303A.02(a) of the NYSE Listed Company Manual, which requires an affiliateaffirmative determination by our Board that the director has no material relationship with us that would impair independence. In addition, Section 303A.02(b) of the NYSE Listed Company Manual sets forth certain tests that, if any of them is met by a director automatically disqualifies that director from being independent from management of our Company. Moreover, our Corporate Governance Guidelines provide that if any director receives, during any 12-month period within the last three years, more than $120,000 per year in direct compensation from the Company, exclusive of director and committee fees and pension or officerother forms of deferred compensation, he or she will requirenot be considered independent. Our Corporate Governance Guidelines also provide that at all times that the approvalChairman of the Board is not an independent director, at least two-thirds of the members of the Board should consist of independent directors. The full text of our Board’s Corporate Governance Guidelines can be found on our website at www.ahtreit.com by clicking the “Investor” tab, then the “Corporate Governance” tab and then the “Governance Documents” link.
Following deliberations, our Board has affirmatively determined that, with the exception of Mr. Monty J. Bennett, our Chairman, and Mr. J. Robison Hays, III, our Chief Executive Officer and President, each nominee for election as a director of the Company is independent of Ashford Trust and its management and has been such during his or her term as a director commencing with the annual meeting of stockholders of the Company, held on May 10, 2022, under the standards set forth in our Corporate Governance Guidelines and the NYSE Listed Company Manual, and our Board has been since such date and is comprised of a majority of independent directors, as required by Section 303A.01 of the disinterestedNYSE Listed Company Manual. Any reference to an independent director herein means such director satisfies both the standards set forth in our Corporate Governance Guidelines and the NYSE independence tests.
In addition, each current member of our Audit Committee and our Compensation Committee has been determined by our Board to be independent and to have been independent at all pertinent times under the heightened independence standards applicable to members of audit committees of board of directors and to members of compensation committees of board of directors of companies with equity securities listed for trading on the NYSE and under the rules of the SEC under the Exchange Act and that each nominee for election as a director of the Company at the Annual Meeting is independent under those standards.
In making the independence determinations with respect to our current directors, our Board examined all relationships between each of our directors or their affiliates and Ashford Trust or its affiliates. Our Board determined that none of these transactions impaired the independence of the directors involved.
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Board Committees and Meetings Historically, the standing committees of our Board have been the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Related Party Transactions Committee and the Acquisitions Committee. Each of the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee is governed by a written charter that has been approved by our Board. A copy of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee charters can be found on our website at www.ahtreit.com by clicking the “Investor” tab, then the “Corporate Governance” tab and then the “Governance Documents” link. The committee members of each active committee and a description of the principal responsibilities of each such committee follows:
Current Committee Membership | Monty J. Bennett | | | | | | | | | | | | | | | | |
| Benjamin J. Ansell, M.D. | | | | | | | | | | | | | | | | |
| Amish Gupta | | | | | | | | | | | | | | | | |
| Kamal Jafarnia | | | | | | | | | | | | | | | | |
| Frederick J. Kleisner | | | | | | | | | | | | | | | | |
| Sheri L. Pantermuehl | | | | | | | | | | | | | | | | |
| Alan L. Tallis | | | | | | | | | | | | | | | | |
(C): Chair
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| Current Members: | | | Sheri L. Pantermuehl (chair), Frederick J. Kleisner and Alan L. Tallis | |
| Independence | | | All of the members of the Audit Committee have been determined by our Board to be independent at all pertinent times, including under the heightened independence standards for members of audit committees of boards of directors. | |
| Number of Meetings in 2022: | | | Five | |
| Key Responsibilities | | | • | | | Evaluate the performance, qualifications and independence of the independent auditors; | |
| | | | • | | | review with the independent auditors and the Chief Financial Officer and controller the audit scope and plan; | |
| | | | • | | | approve in advance all audit and non-audit engagement fees; | |
| | | | • | | | if necessary, to appoint or replace our independent auditors; | |
| | | | • | | | meet to review with management and the independent auditors the annual audited and quarterly financial statements; | |
| | | | • | | | recommend to our Board whether the Company’s financial statements should be included in the Annual Report on Form 10-K; | |
| | | | • | | | prepare the audit committee report that the SEC rules and regulations require to be included in the Company’s annual proxy statement; | |
| | | | • | | | discuss with management the Company’s major financial risk exposures and management’s policies on financial risk assessment and risk management, including steps management has taken to monitor and control such exposures; | |
| | | | • | | | annually review the effectiveness of the internal audit function; | |
| | | | • | | | review with management the Company’s disclosure controls and procedures and internal control over financial reporting, and review the effectiveness of the Company’s system for monitoring compliance with laws and regulations, including the Company’s code of conduct and cybersecurity; and | |
| | | | • | | | evaluate its own performance and deliver a report to the Board setting forth the results of such evaluation. | |
Each current Audit Committee member qualifies as an “audit committee financial expert,” as defined by the applicable rules and regulations of the Exchange Act. All of the members of our Audit Committee on and after January 1, 2022 are “financially literate” under the NYSE listing standards.
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| Current Members: | | | Alan L. Tallis (chair), Kamal Jafarnia and Frederick J. Kleisner | |
| Independence | | | All of the members of the Compensation Committee have been determined by our Board to be independent at all pertinent times, including under the heightened standards for members of the compensation committees of boards of directors. | |
| Number of Meetings in 2022: | | | Three | |
| Key Responsibilities | | | • | | | Review the Company’s equity compensation programs to ensure the alignment of the interests of key leadership with the long-term interests of stockholders; | |
| | | | • | | | either as a committee or together with the other independent directors (as directed by our Board), determine and approve the Chief Executive Officer’s and Chairman of our Board’s equity compensation; | |
| | | | • | | | make recommendations to our Board with respect to the equity compensation of other executive officers; | |
| | | | • | | | review the performance of our officers; | |
| | | | • | | | review and approve the officer compensation plans, policies and programs; | |
| | | | • | | | annually review the compensation paid to non-employee directors for service on our Board and make recommendations to our Board regarding any proposed adjustments to such compensation; | |
| | | | • | | | prepare an annual report on executive compensation for the Company’s annual proxy statement; and | |
| | | | • | | | administer the Company’s equity incentive plan. | |
The Compensation Committee has the authority to retain and terminate any compensation consultant to assist it in the evaluation of officer compensation, or to delegate its duties and responsibilities to one or more subcommittees as it deems appropriate. In 2022, the Compensation Committee retained Gressle & McGinley LLC (“Gressle & McGinley”) as its independent compensation consultant. Gressle & McGinley provided competitive market data to support the Compensation Committee’s decisions on the value of equity to be awarded to our named executive officers. Gressle & McGinley has not performed any other services for the Company and performed its services only on behalf of, and at the direction of, the Compensation Committee. Our Compensation Committee reviewed the independence of Gressle & McGinley in light of SEC rules and NYSE listing standards regarding compensation consultant independence and has affirmatively concluded that Gressle & McGinley is independent from management of the Company and has no conflicts of interest relating to its engagement by our Compensation Committee.
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| Current Members: | | | Kamal Jafarnia (chair), Benjamin J. Ansell, M.D. and Frederick J. Kleisner | |
| Independence | | | All of the members of the Nominating and Corporate Governance Committee have been determined by our Board to be independent at all pertinent times. | |
| Number of Meetings in 2022: | | | Three | |
| Key Responsibilities | | | • | | | Assess, develop and communicate with our Board for our Board’s approval the appropriate criteria for nominating and appointing directors; | |
| | | | • | | | recommend to our Board the director nominees for election at the next annual meeting of stockholders; | |
| | | | • | | | identify and recommend candidates to fill vacancies on our Board occurring between annual stockholder meetings; | |
| | | | • | | | when requested by our Board, recommend to our Board director nominees for each committee of our Board; | |
| | | | • | | | develop and recommend to our Board our Corporate Governance Guidelines and periodically review and update such Corporate Governance Guidelines as well as make recommendations concerning changes to the charters of each committee of our Board; | |
| | | | • | | | perform a leadership role in shaping our corporate governance policies and procedures; and | |
| | | | • | | | oversee a self-evaluation of our Board. | |
| Members: | | | Amish Gupta (chair), Sheri L. Pantermuehl and Alan L. Tallis | |
| Number of Meetings in 2022: | | | Three | |
| Key Responsibilities | | | • | | | Review any transaction in which our officers, directors, Ashford Inc. or Braemar or their officers, directors or respective affiliates have an interest, including any other related party and their respective affiliates, before recommending approval by a majority of our independent directors. The Related Party Transactions Committee can deny a new proposed transaction or recommend for approval to the independent directors. Also, the Related Party Transactions Committee periodically reviews and reports to our independent directors on past approved related party transactions. | |
| Members: | | | Monty J. Bennett (chair), Benjamin J. Ansell, M.D. and Amish Gupta | |
| Number of Meetings in 2022: | | | None. | |
| Key Responsibilities | | | • | | | Review and approve any acquisition or disposition (and any related property level financing) by the Company, or its affiliates of assets valued at under $100 million. | |
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Each of our non-employee directors (other than our Chairman, Mr. Monty J. Bennett) in 2022 was paid an annual base cash retainer of $140,000 (which was increased from $90,000 effective as of February 22, 2022). Commencing effective as of February 21, 2023, the annual base cash retainer was decreased to $95,000, and each director became eligible for an additional fee of $3,000 for each Board or committee meeting that he or she attends during a calendar year in excess of four meetings. Non-employee directors serving in the following capacities also receive the additional annual cash retainers set forth below:
| Lead Director | | | 50,000 | |
| Audit Committee Chair | | | 25,000 | |
| Compensation Committee Chair | | | 15,000 | |
| Nominating and Corporate Governance Committee Chair | | | 15,000 | |
| Related Party Transactions Committee Chair | | | 10,000 | |
| Committee Member (Non-Chair) | | | 5,000 | |
Each non-employee director (other than our Chairman, Mr. Monty J. Bennett) also receives an annual grant of immediately vested equity shares valued for 2022 at $90,000 (and which was increased to $95,000 effective as of February 21, 2023), in the form of shares of our common stock or long-term incentive partnership units (“LTIP units”) in our operating partnership, at the election of each director, and additional cash retainers from time to time for their service on special committees. Our Chairman, Mr. Bennett, instead receives an annual incentive compensation grant (for 2022, in the form of an equity-based award and a deferred cash compensation award) with a value and vesting schedule that is determined by the Board after review of the Company’s prior fiscal year performance, considering the same factors as the Board takes into account in making annual incentive compensation grants to our named executive officers (as further described below under “Executive Compensation”). Mr. Bennett’s annual award is not granted in respect of his service on the Board, but instead in recognition of the extraordinary service that he provides to the Company indirectly through his employment with our advisor. The Board believes that the size of, and vesting schedule applicable to, Mr. Bennett’s annual grant is appropriate because it reflects the scale of his historical and ongoing contributions to the Company, the depth of his expertise and knowledge of both the Company and our industry generally, and his continuous leadership as a founder of the Company and our advisor.
We have historically reimbursed and will continue to reimburse all directors for reasonable out-of-pocket expenses incurred in connection with their services on the Board. Officers receive no additional compensation for serving on the Board.
To encourage retention of our non-employee directors, we also provide a special, one-time cash or equity award to qualifying retiring directors.
• Pursuant to this arrangement, an eligible director who has completed at least five years of service on the Board will be provided a one-time award upon his or her separation of service with a total value of (x) $10,000 multiplied by (y) each year of service completed on the Board, payable either in cash or in fully vested shares of our common stock, or any combination thereof, in the Board’s discretion. An eligible director will also be entitled to continuing participation in the Company’s prevailing discounted/complimentary hotel room program for a period of years equal to the number of years of Board service completed.Our
board adoptedCorporate Governance Guidelines provide a
policystock ownership requirement for our directors. Under our guidelines, each director should hold common stock with a value in excess of three times his or her annual Board retainer fee in effect at the time of
our initial public offering that requires all approvals, consents, waivers, enforcement actions and decisions relatedsuch director’s election to the
management agreement with Remington be approved by a majorityBoard (excluding any portion of the
independent directors. Our charter provisions, governance policiesretainer fee representing additional compensation for being a committee chairman or committee member). New directors are expected to achieve compliance with this requirement within four years from the date of election or appointment. Once a director has met his or her guideline, he or she will not be considered to be out of compliance with the guideline as a result of stock price volatility. The Company calculates the minimum number of shares necessary to meet compliance with the guidelines, and conflictsthat number of interest policies are designedshares will be the number required to providebe held through the remaining term of a strong and independent board that provides balancedirector’s tenure. Although a director may not sell any common stock granted to them in
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connection with their service to the chiefCompany until the director is in compliance with the guidelines, no director is required to acquire shares on the open market (or is prohibited from selling shares acquired on the open market) in order to meet compliance with the guidelines. As of December 31, 2022, each of our directors had stock ownership that met the guidelines.
The following table summarizes the compensation paid by us to our non-employee directors for their services as director for the fiscal year ended December 31, 2022:
| Benjamin J. Ansell, M.D. | | | $152,257 | | | $89,999 | | | $― | | | $242,256 | |
| Monty J. Bennett | | | $― | | | $― | | | $3,308,982 (2) | | | $3,308,982 | |
| Amish Gupta | | | $210,903 | | | $89,999 | | | $― | | | $300,902 | |
| Kamal Jafarnia | | | $170,070 | | | $89,999 | | | $― | | | $260,069 | |
| Frederick J. Kleisner | | | $162,361 | | | $89,999 | | | $― | | | $252,360 | |
| Sheri L. Pantermuehl | | | $177,778 | | | $89,999 | | | $― | | | $267,777 | |
| Alan L. Tallis | | | $172,674 | | | $89,999 | | | $― | | | $262,673 | |
(1)
| Based on the fair market value of the stock awards computed in accordance with FASB ASC Topic 718 on the date of the grant. See Notes 2, 13, and 15 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the assumptions used in the valuation of stock-based awards. Each director (other than Dr. Ansell, in respect of a portion of his awards) elected to receive his or her fiscal 2022 stock awards as LTIP units. |
(2)
| As described above, Mr. Monty J. Bennett’s annual equity and deferred cash award is not granted in respect of his service on the Board, but instead in recognition of the extraordinary service that he provides to the Company indirectly through his employment with our advisor, and is therefore disclosed in the “All Other Compensation” column. Approximately $596,000 of the amount is attributable to the deferred cash award and the remainder is attributable to the equity portion of the award. Mr. Monty J. Bennett elected to receive the performance-based portion of his award in the form of performance-based LTIP units. See Notes 2, 13, and 15 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the assumptions used in the valuation of stock-based awards. As of December 31, 2022, Mr. Monty J. Bennett held 750 shares of restricted stock, 32,573 service-based LTIP units that remain subject to vesting conditions, and 603,199 performance-based LTIP units that remain subject to vesting conditions, assuming that the applicable performance metrics are achieved at the maximum level. |
Compensation Committee Interlocks and Insider Participation During 2022, Messrs. Tallis, Kleisner and Jafarnia served on our Compensation Committee. Messrs. Tallis, Kleisner and Jafarnia were and are independent directors throughout the period for which they served or have served on our Compensation Committee during 2022 and thereafter. Neither Mr. Kleisner nor Mr. Jafarnia were, are or have ever been an officer or employee of our Company. None of Mr. Tallis, Mr. Kleisner and Mr. Jafarnia serve, or during 2022 served, as (i) a member of a Compensation Committee (or board committee performing equivalent functions) of any entity, one of whose executive
officer and chairman positions and ensures independentofficers served as a director
input and control over matters involving potential conflicts of interest. The board believes the current leadership structure of the companyCompany or as a member of our Compensation Committee, or (ii) a director of another entity, one of whose executive officers served or serves on our Compensation Committee. No member of our Compensation Committee has, or had during 2022, any relationship with Mr. Bennett servingthe Company requiring disclosure as both Chief Executive Officera related person transaction in the section “Certain Relationships and Chairman provides a very well-functioning and effective balance between strong company leadership and appropriate safeguards and oversight by independent directors.
Related Party Transactions” of this proxy statement.
Board OversightAttendance at Annual Meeting of Risk
Ultimately, the full board ofStockholders
In accordance with our Corporate Governance Guidelines, directors
has responsibility for risk oversight, but our committees help oversee risk in areas over which they have responsibility. The board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the
company's business strategy. Our boardCompany are expected to attend the annual meeting of
stockholders in person, by telephone or video conference. All persons who were directors
receives regular updates related to various risks for bothat our
company and2022 annual meeting of stockholders attended our
industry. The audit committee receives and discusses reports regularly from members of management who are involved in the risk assessment and risk management functions on a daily basis and reports its analysis to the full board on a quarterly basis.2022 annual meeting.
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Compensation Risk
Ashford Inc., through its subsidiary Ashford LLC, manages the day-to-day operations of the company and its affiliates in exchange for an advisory fee. As a result, we continue to have executive officers, but we have no employees of our own.
Our named executive officers (as well as employees of our advisor) are eligible to receive equity awards from us, and the compensation committee annually reviews the named executive officers' share ownership levels and retention practices. The compensation committee believes that management's significant stock ownership levels help minimize the likelihood of unnecessary or excessive risk-taking. The compensation committee also has full discretion to evaluate the company's performance in the context of quantitative and qualitative risk management objectives and determine or reduce incentive awards accordingly.
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EXECUTIVE OFFICERS
AND COMPENSATION
The following table shows the names and ages
of each of our current executive officers and the positions held by each individual. A description of the business experience of each for
at least the past five years follows the table.
| | Age | | Title |
---|
Monty
| J. BennettRobison Hays, III | | | 5045 | | | Chief Executive Officer and President | |
Douglas A. Kessler | Alex Rose | | 55 | 37 | President |
David A. Brooks | | | 56 | | Chief Operating Officer,Executive Vice President, General Counsel and Secretary | |
| Deric S. Eubanks | | | 4047 | | | Chief Financial Officer and Treasurer | |
| Mark L. Nunneley | | | 65 | | | Chief Accounting Officer | |
| Chief Executive Officer and President
Age: 45
Director since 2020 | | | Mr. Hays | | | 38 | | has served as our Chief Executive Officer and President since May 2020 and prior to that served as our Chief Strategy Officer since 2015 and our Senior Vice President-Corporate Finance and Strategy since 2010. He has been with our Company since 2005. Mr. Hays also currently serves as Senior Managing Director at Ashford Inc. and served on its board of directors until June 2020. Mr. Hays also previously served as Chief Strategy Officer for Braemar until May 2020. Prior to 2013, in addition to his other responsibilities, Mr. Hays was in charge of our investor relations group. Mr. Hays is a frequent speaker at industry and Wall Street investor conferences. Prior to joining our Company, Mr. Hays worked in the Corporate Development office of Dresser, Inc., a Dallas-based oil field service and manufacturing company, where he focused on mergers, acquisitions and strategic direction. Before working at Dresser, Mr. Hays was a member of the Merrill Lynch Global Power & Energy Investment Banking Group based in Texas.
Mr. Hays has been a frequent speaker at various lodging, real estate and alternative investment conferences around the globe. He earned his A.B. degree in Politics with a certificate in Political Economy from Princeton University and later studied philosophy at the Pontifical University of the Holy Cross in Rome, Italy. | |
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| Executive Vice
President, General
Counsel and Secretary
Age: 37
Executive since 2021 | | | Alex Rose has served as our Executive Vice President, Asset ManagementGeneral Counsel and Secretary since July 2021 and has served in that capacity for Ashford Inc. and Braemar since July 2021.
Mr. Rose brings a broad range of legal experience and corporate governance expertise to our Company. Prior to joining our Company in 2021, he was a Partner at Kirkland & Ellis LLP from July 2018 to June 2021, where he worked with public and private companies, as well as private equity funds and their portfolio companies, in connection with complex transactions such as mergers, acquisitions, joint ventures, divestitures, private financings, recapitalizations, debt and equity security investments, and other general corporate matters. Previously, Mr. Rose was an attorney at Jones Day and Vinson & Elkins LLP.
Mr. Rose holds a J.D. from Columbia University School of Law and a B.S. from the University of Kansas and is admitted to practice law in the States of Texas and New York. | |
Mark
| Chief Financial Officer
and Treasurer
Age: 47
Executive since 2011 | | | Mr. Eubanks has served as our Chief Financial Officer and Treasurer since June 2014 and has served in that capacity for Ashford Inc. and Braemar since June 2014. Prior to serving as Chief Financial Officer and Treasurer, Mr. Eubanks served as our Senior Vice President of Finance from September 2011 to June 2014 and in that capacity for Braemar from April 2013 to June 2014. In his role as Chief Financial Officer and Treasurer, Mr. Eubanks is responsible for assisting our Chief Executive Officer with all corporate finance and financial reporting initiatives and capital market activities including equity raises, debt financings and loan modifications. He also oversees Investor Relations and is responsible for overseeing and executing our hedging strategies. Prior to his role as Senior Vice President of Finance, Mr. Eubanks was Vice President of Investments and was responsible for sourcing and underwriting hotel investments including direct equity investments, joint venture equity, preferred equity, mezzanine loans, first mortgages, B-notes, construction loans and other debt securities. Mr. Eubanks has been with us since our initial public offering in August of 2003. Mr. Eubanks has written several articles for industry publications and is a frequent speaker at industry conferences and industry round tables. Before joining our Company, Mr. Eubanks was a Manager of Financial Analysis for ClubCorp, where he assisted in underwriting and analyzing investment opportunities in the golf and resort industries.
Mr. Eubanks earned a Bachelor of Business Administration degree from the Cox School of Business at Southern Methodist University and is a CFA charter holder. He is a member of the CFA Institute and the CFA Society of Dallas-Fort Worth. | |
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| | 58 | | Chief Accounting Officer
Age: 65
Executive since 2003 | | | Mr. Nunneley has served as our Chief Accounting Officer since May 2003 and has served in that capacity for Ashford Inc. since April 2014 and for Braemar since April 2013. From 1992 until 2003, Mr. Nunneley served as Chief Financial Officer of Remington Lodging. He previously served as a tax consultant at Arthur Andersen & Company and as a tax manager at Deloitte & Touche. Mr. Nunneley is a certified public accountant (CPA) in the State of Texas and is a member of the American Institute of Certified Public Accountants, Texas Society of CPAs and Dallas Chapter of CPAs.
Mr. Nunneley earned his Bachelor of Science degree in Business Administration from Pepperdine University and his Master of Science in Accounting from the University of Houston. | |
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Compensation Discussion and Analysis
The following is a
descriptiondiscussion of the
business experience of Mr. Monty Bennett, see the "Election of Directors" section of this proxy statement.Douglas A. Kessler has served ascompensation program adopted for our named executive officers, which include J. Robison Hays, III, our President since January 2009 and served on our board of directors from January 2013 until November 2013. Mr. Kessler is also the President and a director of Ashford Prime, positions he has held since April 2013. Mr. Kessler has also served as the President of Ashford Inc. since November 2014, and of Ashford LLC since November 2013. Prior to being appointed President of our company, Mr. Kessler served as our Chief OperatingExecutive Officer, and Head of Acquisitions beginning in May 2003. Mr. Kessler has spearheaded numerous key initiatives while at Ashford and has been responsible for several billion dollars of capital transactions along with the growth of the company's asset base to in excess of $4 billion. From July 2002 until August 2003, Mr. Kessler also served as the managing director/chief investment officer of Remington Hotel Corporation.
Prior to joining Remington Hotel Corporation in 2002, Mr. Kessler was employed by Goldman Sachs' Whitehall Real Estate Funds, from 1993 to 2002, where he assisted in the management of more than $11 billion of real estate (including $6 billion of hospitality investments) involving over 20 operating partner platforms worldwide. During his nine years at Whitehall, Mr. Kessler served on the boards or executive committees of several lodging companies, including Westin Hotels and Resorts and Strategic Hotel Capital. Mr. Kessler has diverse real estate experience totaling nearly 30 years and is a member of Urban Land Institute's Hotel Council and is a frequent speaker and panelist at lodging industry conferences including International Hotel Investment Forum, Americas Lodging Investment Summit and the NYU Lodging Conference. Mr. Kessler has a Master's degree in Business Administration and a Bachelor of Arts degree from Stanford University.
Mr. Kessler has 30 years' experience in real estate acquisition, development, sales, finance, asset management, operating companies and fundraising, and he has been involved with the sale, acquisition or financing of several billion dollars of real estate. Mr. Kessler's service with Ashford Trust since our initial public offering, first as Chief Operating Officer and currently as President, together with his prior experience in the real estate industry, allows him to bring a valuable perspective to our board of directors that he is uniquely positioned to provide.
David A. Brooks has served as our Chief Operating Officer, General Counsel and Secretary since January 2009. He has also served as the Chief Operating Officer, General Counsel and Secretary for Ashford Prime since April 2013 and for Ashford Inc. since April 2014. Prior to assuming his current role with the company, Mr. Brooks served as our Chief Legal Officer, Head of Transactions and Secretary from August 2003 to January 2009. Prior to that, he served as Executive Vice President and General Counsel for Remington Hotel Corporation and Ashford Financial Corporation, an affiliate of ours, from January 1992 until August 2003, where he co-led the formation of numerous investment
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partnerships, negotiated and closed approximately $1 billion in asset acquisitions and managed nearly $750 million in non-performing hospitality loans. Prior to joining Remington Hotel Corporation, Mr. Brooks served as a partner with the law firm of Sheinfeld, Maley & Kay.
Mr. Brooks earned his Bachelor of Business Administration in Accounting from the University of North Texas in 1981, his Juris Doctor from the University of Houston Law Center in 1984 and became licensed as a CPA in the State of Texas in 1984 (currently non-practicing status).
Deric S. Eubanks, has served as our Chief Financial Officer, and Treasurer since June 2014 and has served in that capacity for Ashford LLC and Ashford Prime since June 2014. Prior to serving asMark Nunneley, our Chief FinancialAccounting Officer and Treasurer, Mr. Eubanks served as our Senior Vice President—Finance from September 2011 to June 2014 and in that capacity for Ashford LLC and Ashford Prime from April 2013 to June 2014. In his role as Chief Financial Officer and Treasurer, Mr. Eubanks is responsible for assisting our Chief Executive Officer with all corporate finance and financial reporting initiatives and capital market activities including equity raises, debt financings and loan modifications. He also oversees Investor Relations and is responsible for overseeing and executing our hedging strategies. Prior to his role as Senior Vice President Finance, Mr. Eubanks was Vice President of Investments and was responsible for sourcing and underwriting hotel investments including direct equity investments, joint venture equity, preferred equity, mezzanine loans, first mortgages, B-notes, construction loans and other debt securities. Mr. Eubanks has been with us since our initial public offering in August of 2003. Mr. Eubanks has written several articles for industry publications and is a frequent speaker at industry conferences and industry round tables. Before joining our company, Mr. Eubanks was a Manager of Financial Analysis for ClubCorp, where he assisted in underwriting and analyzing investment opportunities in the golf and resort industries.
Mr. Eubanks earned a BBA from Southern Methodist University and is a CFA charter holder. He is a member of the CFA Institute and the CFA Society of Dallas-Fort Worth.
J. Robison Hays III has served as our Chief Strategy Officer since May 2015 and prior to that served as our Senior Vice President—Corporate Finance and Strategy since 2010. He has been with our company since 2005. Mr. Hays also serves as Chief Strategy Officer for Ashford LLC and Ashford Prime since May 2015 and as Chief Strategy Officer of Ashford Inc. since 2014. Mr. Hays also serves as Chief Investment Officer of Ashford LLC. Mr. Hays is responsible for the formation and execution of our strategic initiatives, working closely with our Chief Executive Officer. He also oversees all financial analysis as it relates to the corporate model, including acquisitions, divestitures, refinancings, hedging, capital market transactions and major capital outlays. Prior to 2013, in addition to his other responsibilities, Mr. Hays was in charge of our investor relations group. Mr. Hays is a frequent speaker at industry and Wall Street investor conferences. Prior to joining our company, Mr. Hays worked in the Corporate Development office of Dresser, Inc., a Dallas-based oil field service and manufacturing company, where he focused on mergers, acquisitions and strategic direction. Before working at Dresser, Mr. Hays was a member of the Merrill Lynch Global Power & Energy Investment Banking Group based in Texas.
Mr. Hays has been a frequent speaker at various lodging, real estate and alternative investment conferences around the globe. He earned his A.B. in Politics with a certificate in Political Economy from Princeton University and later studied philosophy at the Pontifical University of the Holy Cross in Rome, Italy.
Jeremy Welter has served asAlex Rose, our Executive Vice President, Asset Management since March 2011. He has also served in that capacity for Ashford Inc. since November 2014General Counsel and for Ashford LLC since November 2013 and Ashford Prime since April 2013. He oversees our more than $5 billion portfolio of hotels. From August 2005 until December 2010, Mr. Welter was employed by Remington Hotels, LP in various capacities, most recently serving as its Chief Financial Officer. HeSecretary. Also included below is a current member of Marriott's Owner Advisor Council. From July 2000 through July 2005, Mr. Welter was an investment
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banker at Stephens, where he worked on mergers and acquisitions, public and private equity and debt, capital raises, company valuations, fairness opinions and recapitalizations. Before working at Stephens, Mr. Welter was part of Bank of America's Global Corporate Investment Banking group. Mr. Welter is a frequent speaker and panelist for various lodging investment and development conferences, including the NYU Lodging Conference.
Mr. Welter earned his Bachelor of Science in Business Administration in Economics from Oklahoma State University, where he served as student body president and graduatedsumma cum laude.
Mark L. Nunneley has served as our Chief Accounting Officer since May 2003 and has served in that capacity for Ashford Inc. since April 2014 and for Ashford LLC and Ashford Prime since April 2013. From 1992 until 2003, Mr. Nunneley served as Chief Financial Officer of Remington Hotel Corporation. He previously served as a tax consultant at Arthur Andersen & Company and as a tax manager at Deloitte & Touche. Mr. Nunneley is a certified public accountant (CPA) in the State of Texas and is a memberdiscussion of the American Instituteincentive compensation awarded to our named executive officers in 2023 with respect to 2022 performance. This discussion should be read together with the compensation tables and related disclosures set forth elsewhere in this proxy statement.
Compensation of
Certified Public Accountants, Texas Society of CPAs and Dallas Chapter of CPAs. Mr. Nunneley earned his Bachelor of Science degree in Business Administration from Pepperdine University in 1979 and his Master of Science in Accounting from the University of Houston in 1981.
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COMPENSATION DISCUSSION & ANALYSIS
Our Executive Compensation Overview
Officers
We are externally advised by Ashford Inc. pursuant to an advisory agreement. Ashford Inc., through its operating company Ashford LLC,
(collectively, our "advisor") is responsible for implementing our investment strategies and managing our operations. We have no employees. Our namedadvisor manages the day-to-day operations of our Company and our affiliates in exchange for an advisory fee, the terms of which are described under “Certain Relationships and Related Person Transactions-Our Relationship and Agreements with Ashford Inc. and its Subsidiaries.” As a consequence of this management arrangement and although the Company has executive officers, are employeesit does not have any employees. Each of the Company’s executive officers is, however, an employee of our advisor which determines their salaries, bonuses and other benefits. We do not determineis compensated by our advisor in his capacity as such. During all of 2020, 2021 and 2022, the cash compensation payable toreceived by our named executive officers was paid to those persons by Ashford Inc. in their capacity as employees of our advisor. However, our compensation committee, together with the independent members of the board, may grant equity awards to ourexecutive officers and(as well as other employees and other agents of our advisor pursuantadvisor) continue to be eligible to receive equity-based (and, for 2022 and 2023, certain cash) awards under our stock incentive plan.2021 Stock Incentive Plan, as amended. We do not, however, provide any other compensation or employee benefit plans for our executive officers.
Compensation Objectives & Philosophy
The
primary objectives of our equity compensation program are to: (i) motivate our
executive officers to achieve the
company'sCompany’s business and strategic objectives; (ii) align the interests of key leadership with the long-term interests of the
company'sCompany’s stockholders; and (iii) provide rewards and incentives, without excessive risk taking, in order to attract, retain and motivate our executive officers to perform in the best interests of the
companyCompany and its stockholders.
In May 2015, ISS Proxy Advisory Services ("ISS") recommended a vote against the company's advisory vote to approve executive compensation, or "say on pay," at the company's 2015 annual meeting. Their recommendation was not based on a misalignment of pay and performance. On the contrary, ISS's quantitative assessment indicated a strong alignment between our performance and our CEO compensation, with the best possible rating (i.e. "low concern") on all three measures. Their recommendation was based on what they identified as "problematic pay practices" (related to provisions in a newly revised employment agreement and a provision in our anti-pledging policy) and what they viewed as the discretionary nature of our incentive programs. As discussed in this Compensation Discussion & Analysis section, all of these concerns have been fully addressed and we have included new disclosures to comply with their newly adopted guidelines related to Externally Managed Issuers (EMIs).
Although 54% of the votes cast at the 2015 annual meeting were in favor of the company's executive compensation plans, this level of support was down from approximately 90% in 2014 and 87% in 2013. In 2015, the company discussed with a number of its institutional stockholders the company's executive compensation practices. In response to feedback from the company's shareholders, the compensation committee has taken a series of actions to enhance the company's equity compensation program. In July, the committee retained Gressle & McGinley LLC as its independent outside compensation consultant. Based on a thorough review of our peer companies and current industry trends, the committee revised the equity compensation plan to include objective performance metrics tied to the company's business goals and shareholder returns. Furthermore, the committee set specific vesting requirements for half of the equity awards granted on March 31, 2016 for 2015 company performance, based on relative total shareholder return and absolute shareholder returns.
During 2015, our company delivered strong operating performance, with management achieving eight of the ten business objectives set by our board of directors for the year. At the same time, share prices of hospitality REITs experienced significant declines during the year. While our 2015 Total Shareholder Return ("TSR") of negative 31.2% was better than the median of our peers (negative 31.8%), we recognize that our stockholders saw a sizable decline in the value of their investments. The compensation committee has reacted accordingly, reducing the average value of the equity awarded to our named executive officers (in comparable full-year positions) by approximately 40% over last year. This is a significant reduction, but it should be noted that it is not reflected in the Summary Compensation Table, which includes equity in the year granted according to the SEC's rules and regulations. We believe the year-over-year comparison is better seen in the supplemental table we have
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provided below in the section "—2015 Equity Grant Decisions," which discloses the equity compensation corresponding to the year in which performance was evaluated.
Business Strategy
We are a REIT listed on the NYSE (symbol: AHT) that invests in the hospitality industry across all segments and at all levels of the capital structure primarily within the United States other than hotels in gateway markets with revenue available per room, or "RevPAR," in excess of twice the national average. Until we spun off Ashford Inc. on November 12, 2014, we were a self-administered and managed REIT. After the spin-off, we became an externally administered and managed REIT with Ashford Inc. and Ashford LLC acting as our advisor. We implement our key strategies of (i) investment growth and (ii) portfolio management, to create stockholder value as measured by total shareholder returns, including stock price appreciation and dividends.
To maximize shareholder returns, we seek to acquire or invest in assets that provide accretive growth. Our investment growth is based upon meeting targeted returns, utilizing market research, carefully underwriting, and evaluating the transaction's overall contribution to the existing portfolio. Each investment is evaluated on its relative expected contribution to our hotel portfolio in terms of total return, volatility, financeability, product type or brand, asset quality, location, and diversification. To maintain investment focus, we target hotel assets with RevPAR of less than two-times the U.S. national average. We will consider direct investments as well as joint ventures. By location, the investment profile includes hotels in primary, secondary and tertiary markets. Asset classes include most of the major branded full and select service hotels along with independent hotels. In addition to direct hotel ownership, we may invest in hotel debt as well as securities.
Our portfolio management efforts seek to maximize shareholder returns, while minimizing risk. Through pro-active asset management, we seek to enhance value at the property level with a focus on revenue strategies, expense controls, asset positioning, and capital expenditures. Our goal is to maximize growth from internal asset performance. Moreover, the dynamic portfolio management strategies implement finance and capital recycling initiatives that monitor and optimize our capital structure. We sell assets and redeploy capital based upon opportunities. In addition, our financing strategy generally follows a non-recourse debt approach that seeks to utilize high property level debt in conjunction with high corporate cash liquidity.
The combination of our investment growth and asset management strategies seeks to maximize long-term shareholder returns throughout all lodging cycles while also reducing performance risk.
Compensation Objectives & Philosophy
The objectives of our equity compensation program are to: (i) motivate our officers to achieve the company's business and strategic objectives; (ii) align the interests of key leadership with the long-term interests of the company's stockholders; and (iii) provide rewards and incentives, without excessive risk taking, in order to attract, retain and motivate our executive officers to perform in the best interests of the company and its stockholders.
Our compensation philosophy is to make all equity compensation decisions following the end of our fiscal year based on the performance of the prior year and over the longer term. As a result, equity based awards reflected in our Summary Compensation Table reflect compensation for prior year performance. Throughout this Compensation Discussion & Analysis section, we provide a discussion of equity compensation decisions made in early 2016 as they reflect 2015 performance. In the Compensation Discussion & Analysis section of our proxy statement for the 2015 annual meeting of our stockholders, which was filed with the SEC on April 21, 2015, we provided a discussion of pay decisions made in early 2015 as they reflected 2014 performance.
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We believe that the equity compensation we pay to our executive officers should be reflective of the overall performance of our company on both a short-term and a long-term basis. The equity compensation we offer should reward the sustained successes of the past, as well as motivate the executives to maximize the creation of long-term stockholder value in a competitive environment. Most of our management team has been working together for over 20 years, and the company believes that the synergies among the management team, along with their cumulative knowledge and breadth of experience, were key factors in the company's growth since its inception.
The
equity compensation we pay to our executive officers is administered under the direction of our
compensation committee.Compensation Committee. In its role as the administrator of our
equity compensation program, our
compensation committeeCompensation Committee recommends the
equity compensation
ofto be paid to our named executive officers to the
board,Board, taking into consideration the recommendations of
the chief executive officer,our Chairman and our independent compensation consultant, with the
independent members of the
boardBoard ultimately approving all executive compensation decisions. A full description of the
compensation committee'sCompensation Committee’s roles and responsibilities can be found in its charter which is posted to our website at
www.ahtreit.com. under the “Investor” tab, by navigating to the “Corporate Governance” link, then to the “Governance Documents” link.
Our compensation committeeCompensation Committee has the authority to retain independent advisors to assist the committee in fulfilling its responsibilities. During 2013, 2014 and early 2015 our compensation committee retained the services of Semler Brossy Consulting Group ("Semler Brossy"), an independent compensation consulting firm, to support its decision-making on executive pay practices. In July of 2015, the committee initially retained Gressle & McGinley LLC as its new independent compensation consultant, replacing Semler Brossy. Neither Semler Brossy norand has continued to do so. Gressle & McGinley has not performed any services other than executive and director compensation services for the company,Company, and eachhas performed its services only on behalf of, and at the direction of, the Compensation Committee (although Gressle & McGinley is also the independent compensation committee.consultant to the compensation committees of the boards of directors of our advisor, Ashford Inc., and Braemar). Our compensation committeeCompensation Committee has reviewed the independence of Semler Brossy and Gressle & McGinley in light of SEC rules and NYSE listing standards regarding compensation consultant independence and has affirmatively concluded that each of Semler Brossy and Gressle & McGinley is independent from the companyCompany and has no conflicts of interest relating to its engagement by our compensation committee.Compensation Committee.
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Interaction with Management
Our
compensation committeeCompensation Committee regularly meets in executive sessions without management
or other directors present. Executives generally are not present during
compensation committee meetings, except, when requested,Compensation Committee meetings. However, our
chiefChairman and certain of our executive
officer doesofficers and employees of our advisor do attend all or part of certain
compensation committeeCompensation Committee meetings. Our
chief executive officer,Chairman, considering certain performance factors as set by the
boardBoard each year, annually reviews the
equity compensation for each named executive officer and
our advisor’s (and its subsidiaries’) employees as a group and makes recommendations to our
Compensation Committee regarding the compensation
committee.we should grant to our named executive officers and our advisor’s (and its subsidiaries’) employees as a group. Final
equity compensation decisions
for our executive officers are ultimately made in the sole discretion of,
and with the
compensation committee and approved by the independent directorsapproval of, the
board.Our
compensation committeeCompensation Committee believes that
our solidthe integrity of corporate governance
should beis reinforced
by linking our executive officers’ long-term interests to the interests of our stockholders through our
equity compensation program. We believe that our
new equity compensation program provides appropriate performance-based incentives to attract and retain leadership talent
and to align
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officer and stockholder interests and to continue to drive our long-term track record of superior returns to stockholders. interests.
The following policies support our position:
What We Do | | | | | What We Don'tDon’t Do | |
---|
ü | | Pay for Performance.Performance. A substantial portion of our equity grants are now tied to rigorous absolute and relative TSRincentive compensation performance goals. | | Ø | | No Hedging/Pledging.Pledging. We do not allow hedging or pledging of companyCompany securities. | |
ü |
|
Equity Ownership Guidelines.Guidelines. We impose robust stock ownership guidelines on our directors and executive officers. | |
Ø |
|
Equity Ownership Guidelines.Guidelines. We do not count performance shares toward our stock ownership guidelines. | |
ü |
|
Clawback Policy.Policy. We can recover performance-basedannual cash bonuses and long-term equity incentive compensation in various circumstances. | |
Ø |
|
No Dividends on Unvested Performance Shares.Shares. We do not pay dividends on unvested performance shares unless the shares actually vest. | |
ü |
|
Independent Compensation Consultant.Consultant. Our compensation committeeCompensation Committee uses the consulting firm of Gressle & McGinley, which is independent and provides no other services to the company.Company. | |
Ø |
|
No Stock Options.Options. We do not grant stock options. | |
ü |
|
Compensation Risk Assessment.Assessment. We conduct an annual compensation risk assessment. | |
Ø |
|
No Evergreen Provision. We have no evergreen provisions in our stock incentive plan. | |
ü |
|
External Advisor Compensation.Compensation. We provide detailed disclosure of compensation paid by our advisor to our named executive officers. | |
Ø |
|
No Perquisites.Perquisites. We do not provide our executive officers with any perquisites or retirement programs. | |
EffectConsideration of
Ashford Inc. Spin-Off In November 2014,Say-on-Pay Vote
At our 2022 annual meeting of stockholders, we
completed a spin-off of a subsidiary, Ashford Inc., in order to separateprovided our
asset management and advisory business from our hospitality investment business. Prior to the spin-off, all of our employees were employees of our subsidiary Ashford LLC. In connectionstockholders with the
spin-off, Ashford LLC becameopportunity to vote to approve, on a
subsidiary of Ashford Inc., a separate publicly traded company. Our advisor manages the day-to-day operation of our company and our affiliates in exchange for annon-binding advisory
fee, the terms of which are described under "Certain Relationships and Related Party Transactions—Our Relationship and Agreements with Ashford Inc." While we continue to have executive officers, we no longer have any employees. We paid all cash compensation to our prior employees, includingbasis, our executive officers, for all periods during 2014 up until November 12, 2014, the datecompensation. More than 82% of the spin-off. Followingvotes cast at our 2022 annual meeting of stockholders voted to approve our executive compensation as described in our proxy statement for the spin-off,2022 annual meeting of stockholders. The Compensation Committee reviewed the results of this advisory “say-on-pay” vote and during all of 2015, Ashford Inc. paid all cash compensationconsidered it in determining specific award amounts granted to such employees, including our officers. However, following the spin-off, our named executive officers (as well as employeesfor 2022. The Compensation Committee will also carefully consider future stockholder votes on this matter, along with other expressions of our advisor) continue to be eligible to receive equity awards under our equity incentive plan. We do not provide any other compensation or employee benefit plans for our named executive officers.stockholder views it receives on specific policies and desirable actions.
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Advisory Fee and Compensation Paid by the Advisor
Pursuant to our advisory agreement, we pay Ashford Inc. an advisory
fee,fee. In turn, Ashford Inc. uses a portion of the proceeds of
which are used in partsuch advisory fee to pay
the cash compensation
toit pays its
personnel, but wepersonnel. We do not specifically reimburse Ashford Inc. for any executive
employeeofficer compensation or benefits costs. The following is a summary of
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the advisory fees we paid to Ashford Inc. in 20152022 and the total 20152022 compensation paid to our named executive officers:
•- officers, including the equity compensation we paid to our named executive officers in 2022:
Under the terms orof our advisory agreement, for 20152022 our advisory services fee totaled $43.0approximately $49.9 million, comprised of a base fee of $33.8approximately $34.8 million, reimbursable overhead, and internal audit, insurance claimsrisk management advisory, and asset management services of $6.5approximately $9.9 million and equity-based compensation of $2.7approximately $5.2 million associated with equity grants of our common stock and long-term incentive partnership units, or LTIP units, awarded to theour executive officers and employees of Ashford Inc.
•- and its subsidiaries.
No specific portion of our advisory feesfee is allocated to the compensation paid by Ashford Inc. to its employees who are also our executive officers. Our advisor makes all decisions relating to compensation paid by Ashford Inc. to our executive officers who are its employees based on such factors as the terms of their employment agreements with Ashford Inc. and an evaluation of the performance of such employees on behalf of Ashford Inc. and its advisees during the year.
•For 2015,2022, our named executive officers earned total cash compensation of $5,995,214approximately $5.4 million from Ashford Inc. No awardsbased on amounts determined through the date hereof. This amount was comprised of equityan aggregate of approximately $2.1 million in salaries and an aggregate of approximately $3.3 million in cash bonuses. In addition, Ashford Inc. were granted 51,341 restricted shares of common stock of Ashford Inc. with an aggregate grant date fair value of approximately $829,000, to our named executive officers in 2015. The total cash compensation paid by Ashford Inc. with respect to compensation earned by our named executive officers was comprised of $2,655,000 in salaries, $150,000 in bonus awards and $3,190,214 pursuant to a non-equity incentive plan.
•- officers.
Not all of the
cash compensation received by our named executive officers from Ashford Inc. was attributable to services performed as executive officers of our
company.Company. Based on a review of the proportion of our
companyCompany to the total operations managed using various measures of size (revenue, assets, and total enterprise value), we estimate that approximately
70% to 75%55% of the compensation paid by Ashford Inc. is attributable to services provided by our named executive officers to our
company.Company.
The
cash2022 annual bonus
awards paid pursuant toprogram at Ashford Inc.
's non-equity incentive plan represent variable incentive compensation that was earned for achieving specific took into account a variety of financial performance
targets. The performance metrics for 2015 included total shareholder return relative to peers, adjusted earnings per share, sell-side analyst coverage, number of investor and analyst meetings, attendance at an investor/analyst meeting, increase in assets under management in managed REITs, private capital raised and the launch of a new select service segment. Following the spin-off, the only compensation we pay to our named executive officers is equity based compensation awarded under our equity incentive plan.
Say on Pay
The company and the compensation committee engaged in a comprehensive process to understand and address the issues raised by the 2015 say on pay vote, including diligent outreach to shareholders and the engagement of a new independent compensation consultant. To address concerns raised by shareholders and the proxy advisory firms, the compensation committee approved a new equity program under which at least 50% of the equity granted would vest based on the company's TSR performance (half absolute and half relative to peers) over a three-year period beginning on the first day of the year of grant as described under "—Company Performance and 2015 Equity Grant Decisions." In addition, the company revised its hedging policy to prohibit all pledging of securities by officers and directors. Shareholders raised another concern related to terms for termination payments under a revised employment agreement. Because we no longer have employees or employment agreements, this concern is no longer applicable to us.
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Review of Market Data for Peer Companies
Equity compensation grants for our named executive officers are determined based on a number of factors, including a periodic review of the compensation levels in the marketplace for similar positions. In 2015, the compensation committee, with the assistance of Gressle & McGinley, our independent compensation consultant, undertook such a review of competitive compensation compared to market, with a particular emphasis on market level of equity compensation (both actual awards grantedattainment of budgeted revenue, budgeted adjusted EBITDA and target awards from our peers' equity incentive plans).
Competitive pay data is used for reference only to gauge the marketplace for executive compensation in our industry. The compensation committee does not establish a specific target percentile of market for our executives and generally seeks to provide the compensationliquidity levels, needed to retain our exceptional executive team and reward appropriately for performance.
The specific peers used to assess competitive pay include other hospitality REITs with similar assets. The hospitality REITs included in our assessment of competitive pay include:
| | |
Chatham Lodging Trust | | LaSalle Hotel Properties |
Chesapeake Lodging Trust | | Pebblebrook Hotel Trust |
DiamondRock Hospitality Company | | RLJ Lodging Trust |
FelCor Lodging Trust | | Strategic Hotels & Resorts |
Hersha Hospitality Trust | | Summit Hotel Properties |
Host Hotels & Resorts | | Sunstone Hotel Investors |
The compensation committee also assessed the pay practices of these hospitality REITs in evaluating 2016 equity grant decisions for 2015 performance. Specifically, the committee reviewed the absolute and relative TSR performance targets used by our peers in their equity programs. The committee set the performance targets (threshold, target and maximum) for the absolute and relative TSR components of the 2016 equity awards at about the median of our peers.
In evaluating the market pay levels of our peers, the compensation committee also considers the unique role that each of the named executive officers of the company holds. Specifically, each of our named executive officers performs duties that are traditionally assigned to multiple senior officers in competitive companies. The president, by way of example, is charged with capital markets activities and is also responsible for securing our investments and for identifying opportunities for joint ventures or other business partnerships as well as being the lead contact for company financing activities. non-financial strategic goals related to loan terms and third-party business growth in selected operational segments.
2022 and 2023 Incentive Compensation Grant Decisions
The
chief operating officer is also the general counsel and has the mandate to negotiate the terms of, and close, all acquisition and disposition transactions, capital market transactions and equity and debt financings. In addition, he is charged with supervising the legal department, monitoring corporate governance and performing the normal duties associated with the office of the corporate secretary. The company's unusual division of responsibilities has created a cohesive and extremely streamlined management system, which enables the company to operate with a smaller staff of senior executives, including the named executive officers, than would be expected of a company of our size and structure. The compensation committee recognizes that these other factors must be considered in setting compensation for each named executive officer. Together with its consideration of the unique roles of each named executive officer, the compensation committee also considers the time commitment of the chief executive officer to the company in relation to his executive duties at Remington and its affiliates. Based on its review, the compensation committee has determined that those business activities are generally beneficial to the company and do not materially interfere with his duties to the company. Therefore, the committee follows a compensation philosophy for the chief executive officer that is comparable with the philosophy for the other named executive officers.
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The following is a discussion and analysis of the new equity compensation program adopted for our named executive officers (including our chief executive officer, chief financial officer, and the three other most highly compensated executive officers appearing in the Summary Compensation Table), along with a discussion of the equity awarded in 2016 for 2015 performance. This discussion should be read together with the compensation tables and related disclosures set forth elsewhere in this proxy statement.
Company Performance
The compensation committeeCommittee believes that our named executive officers should have an ongoing stake in the long-term success of our business, and our equityincentive compensation program is intended to align our executives'executives’ interests with those of our stockholders. In its 2015 report, ISS recognized the strong alignment between our performance and our CEO's compensation, providing us with the best possible rating (i.e., "low concern") following ISS's initial quantitative screens measuring pay-for-performance alignment. However, ISS cited a concern that, "While the company provides equity awards based on prior year performance, the vesting conditions of such awards are entirely time-based, lacking any performance conditions." In responsestockholders, as well as to that concern, the lower approval rate of our 2015 say on pay vote and feedback from our stockholders, the committee retained Gressle & McGinley to design a new equity program that would provide strong incentives forreward our executive officers to create sustainable value, would be cost-effective from a shareholder perspective and would meet withfor their performance on the guidelines of major institutional investors and proxy advisory firms.
Based on Gressle & McGinley's reports on market pay data and best practices in executiveCompany’s behalf. Under our incentive compensation the committee adopted a new equity program for 2015. Under the new equity program, the committeeCompensation Committee determines the size of potential equity awards by officer based on a review of market pay levels, taking into consideration the size of our companyCompany against our peers. peers, as well as multiple other factors including, but not limited to, the Company’s and each named executive officer’s individual performance, competitive award opportunities provided to similarly situated executives, and our named executive officers’ roles and responsibilities.
The
committee also considersSEC’s rules require disclosure in the
most recent burn rate benchmarks published by ISS for the real estate Global Industry Classification Standard (GICS). One-halftables that follow this Compensation Discussion and Analysis of the valueequity awards that were granted to our named executive officers in 2022. However, this “2022 and 2023 Incentive Compensation Grant Decisions” section describes incentive compensation grants made to our named executive officers in March 2023 because the Company’s long-term incentive compensation awards are granted to named executive officers in respect of their performance during the potential award is grantedpreceding year. For a discussion of awards made in 2022 (in respect of 2021 service), please refer to the form of performance-based equity that will vest“Executive Compensation” discussion contained in our 2022 proxy statement, filed with the SEC on March 30, 2022.
For our March 2023 awards based on
the company's three-year Total Stockholder Return (TSR). The other half of the potential award is eligible to be earned based on management's2022 performance,
against business objectives adopted by the board of directors for the preceding year. For 2015, the size of the potential equity awards for our named executive officers was first assesseddetermined based on 2022 performance, historical compensation levels in the hospitality REIT sector. However, although our TSR exceeded mostsector (please refer to “—Review of our peers in 2015, our share price declined significantly in 2015 withMarket Data for Peer Companies” below for further discussion of this analysis) and the rest of the hospitality REIT sector. As a result, the committee decided to reduce the size of the potential equity awards that could be earned by our named executive officers. The reduction was significant—averaging about 40% of the value of the awards granted for 2014 for officers in comparable positions each year. This decision underscores the committee's philosophy of aligning the pay of our executives with our performance. In determining the size of the overall reduction, the committee considered the ISS burn rate guidelines, as mentioned previously. Also, the committee considered the
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recommendations of the
chief executive officerChairman in setting the
potential equity awards for each individual named executive officer.
2022 performance was evaluated based on seven business objectives established by the Board of Directors. The first grantBoard believes these objectives reflected the cyclicality of the industry in which we operate and evolving changes in market conditions and were appropriate to further align the interests of the named executive officers with the interests of our stockholders. The following table summarizes the seven business objectives set by the Board of Directors for 2022, along with the actual results:
2022 Business Objectives
| Revenue | | | Budget | | | $956.9M | | | $1,240.9M | | | Yes | |
| Adjusted EBITDAre* | | | Budget | | | $131.4M | | | $287.3M | | | Yes | |
| Maintain Corporate Liquidity | | | At Least $50M | | | $50M | | | $831.5M | | | Yes(1) | |
| Investor/Analyst Interactions | | | At Least 500 | | | 500 | | | 700+ | | | Yes(2) | |
| Extension Tests | | | At Least three | | | Three | | | Three | | | Yes | |
*
| For a reconciliation of EBITDA, EBITDAre, Adjusted EBITDAre and EBITDA Flows (the change in Adjusted EBITDAre divided by the change in revenue) to a measure under generally accepted accounting principles (“GAAP”) in the United States, see Annex A. |
(1)
| Actual includes cash, restricted cash, due from third party hotel managers and available credit facility. |
(2)
| Total includes online media interviews, industry-related conference calls, investor conferences, as well as individual investor meetings and calls. |
Based on its review of 2022 performance, sharesthe Compensation Committee determined that the Company achieved all five of the business objectives resulting in the equity awards to our named executive officers described below.
Approximately 15% of the value of the annual awards was
made on March 31, 2016. Those shares aregranted in an equity-based form (settled in either equity or cash as determined by the Compensation Committee) that is eligible to vest based on
performance metrics established by the
company's TSR on March 31, 2019. We use a three-year performance period in order to tie incentive compensation to long-term results. Achievement levels are set for "threshold" at which 50% of shares/units may be earned, "target", at which 100%Compensation Committee. For 2023, the other approximately 85% of the
shares/units may be earned and "maximum" performance, at which 200% of the shares/units are earned. No shares/units are earned if performance is below threshold, and results will be interpolated between the levels of threshold, target and maximum. Dividends, or distributions in the case of units, accrue on unvested shares/units and are
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paidaward was made in the form of additional shares/units on the actual number of shares/units that ultimately vest at the end of the three-year performance period.
One-half of the performance shares aredeferred cash payments payable quarterly over three years generally subject to performance goals based on the company's absolute TSR over the performance period. For the shares granted in 2016, the annualized TSR goals for threshold, target and maximum performance levels are 5.0%, 9.0% and 13.0%, respectively. The other half of the performance shares are subjectcontinued service. Named executive officers may elect to performance goals based on the company's relative TSR over the performance period. For the shares granted in 2016, the percentile rank goals for threshold, target and maximum performance levels are the 30th, 50th and 70th percentiles, respectively. The percentile rank will be determined based on the company's three-year TSR relative to the following peer companies:
| | |
Chesapeake Lodging Trust (CHSP) | | LaSalle Hotel Properties (LHO) |
DiamondRock Hospitality Co. (DRH) | | Pebblebrook Hotel Trust (PEB) |
FelCor Lodging Trust Incorporated (FCH) | | RLJ Lodging Trust (RLJ) |
Hersha Hospitality Trust (HT) | | Sunstone Hotel Investors Inc. (SHO) |
Host Hotels & Resorts, Inc. (HST) | | Xenia Hotels & Resorts, Inc. (XHR) |
As stated previously, half of each named executive officer's potentialreceive their performance-based equity awards is in the form of performance shares/units. The other half can be earned based on the company'sstock units (“PSUs”) or performance against business objectives set by the board of directors at the beginning of each year. The equity award based on company objectives is grantedLTIP units (“Performance LTIPs”), as described in the form of time-based shares or LTIPs that vest in three equal annual installments on the first three anniversaries following the date of grant. Dividends are paid on unvested shares.
For 2015, the board of directors set ten business objectives. The compensation committee determined that the full potential award would be earned if seven or more of the business objectives were achieved for the year. For each objective less than seven achieved, the potential award would be reduced by one-seventh (e.g. for achievement of five of the ten awards, the potential award would be reduced by two-sevenths, or 28.57%).
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The following table summarizes the ten business objectives set by the board of directors for 2015, alongfurther detail below. Upon vesting and reaching economic parity with the actual results:
| | |
2015 Business Objectives
| | Performance Results |
---|
1-year, 3-year and 5-year total shareholder return performance in top half of peers
| | 1-year rank: 5th of 11 |
| | 3-year rank: 9th of 11
|
| | 5-year rank: 3rd of 9
|
Achieve budgeted AFFO per share
| | 2015 AFFO per share of $1.41 as compared to budget of $1.06
|
Achieve 35% NOI flows
| | 2015 NOI flows of 56.9%
|
Outperform peer group average EBITDA flows
| | EBITDA flows of 51.7% as compared to peer average of 50.3%
|
Achieve RevPAR yield growth that beats competitive sets
| | 6.8% for all hotels not under renovation as compared to 6.3% for competitive sets for our hotels
|
Hold at least 150 meetings with investors & analysts
| | 735 meetings held
|
Pursue proactive risk management strategies and build up cash balance to range of 20% - 25% of market cap if feasible
| | Excess corporate cash balance of $141 million, or 23% of market cap as of February 4, 2016
|
Strategically raise equity capital
| | Raised $111.1 million of common equity in January and February
|
Grow the platform by buying accretive domestic and/or international assets
| | Acquired $839.2 million of hotel assets in 2015
|
Successfully contribute/sell limited service assets into Ashford Select if launched
| | Announced on January 25, 2016 that the company is no longer marketing the 24 select-service hotel portfolio as a single portfolio, but will instead pursue the sale of those assets in smaller groups or individually
|
Based on its review of 2015 performance, the compensation committee determined that the company achieved eight of the ten business objectives. The first objective was not met because the company's 3-year total shareholder return was not in the top half of its peers. The peer companies used to measure relative total shareholder return included: Chatham Lodging Trust, Chesapeake Lodging Trust, DiamondRock Hospitality Company, FelCor Lodging Trust, Hersha Hospitality Trust, Host Hotels & Resorts, LaSalle Hotel Properties, Pebblebrook Hotel Trust, RLJ Lodging Trust, Summit Hotel Properties and Sunstone Hotel Investors. Also, the last objective was not met because the limited service assets were not divested. The remaining eight business objectives were achieved resulting in 100% of the potential award being earned by our named executive officers.
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2015 Equity Grant Decisions
��Based on consideration of company performance during 2015 and 2014, the compensation committee made equity grants in March 2016 and March 2015, respectively, to our named executive officers as follows (in number of shares awarded):
| | | | | | | |
Executive | | March 2015 Equity Award for 2014 Performance | | March 2016 Equity Award for 2015 Performance | |
---|
Monty J. Bennett | | | 478,969 | (1) | | 461,542 | (2) |
Douglas A. Kessler | | | 265,748 | (3) | | 242,857 | (4) |
David A. Brooks | | | 196,850 | (3) | | 176,565 | (4) |
Deric S. Eubanks(5) | | | 73,819 | (3) | | 163,403 | (4) |
Jeremy Welter | | | 159,656 | (1) | | 170,855 | (2) |
(1)Represents special long-term LTIP units, in our operating partnership that vest in three substantially equal installments on the first three anniversaries following the date of grant. Upon vesting, the LTIP units are convertible into common units at the option of the recipient. Common units are redeemable for cash or, at our option, convertible into shares of our common stock based onat a 1:1 conversion ratio described inratio.
One-half of the partnership agreement of our operating partnership which, on March 31, 2016, was 0.9543923553 shares of our common stock per common unit.
(2)Includes special long-term LTIP units as described in footnote (1). Also includes target number of performance LTIP unit awards ("performancefiscal 2023 PSUs and Performance LTIPs"), which may will be eligible to vest from(from 0% to 200% of target) based on achievement of a specified absolute or relative TSR, as applicable, determined byMedian Annual Adjusted EBITDAre Growth metric (with adjustments for certain asset sales), while the compensation committee on the date that is three years from the date of grant, subjectremaining one-half will be eligible to forfeiture. Upon vesting and reaching economic parity with the common units, the LTIP units are convertible into common units at the option of the recipient. Common units are redeemable for cash or, at our option, convertible into shares of our common stock based on a conversion ratio described in the partnership agreement of our operating partnership which, on March 31, 2016, was 0.9543923553 shares of our common stock per common unit.
(3)Represents shares of restricted common stock that vest in three substantially equal installments on the first three anniversaries following the date of grant.
(4)Includes shares of restricted common stock that vest in three substantially equal installments on the first three anniversaries following the date of grant. Also includes target number of common stock shares that may be issued pursuant to an award of performance stock units ("PSUs"). The actual number of PSUs to be issued upon vesting can range from(from 0% to 200% of targettarget) based on achievementa Net Debt / Gross Investment Property Ratio, in each case in respect of a specifiedthe 2023 to 2025 performance period as set forth in the table below (with linear interpolation between the threshold and target, and target and maximum, performance levels): | Median Annual Adjusted EBITDAre Growth (1) | | | 3% | | | 5% | | | 7% | |
| Net Debt / Gross Investment Property Ratio(2) | | | 75% | | | 70% | | | 60% | |
(1)
| The median of the Company’s annual Adjusted EBITDAre growth rates over the three fiscal years ending December 31, 2023, 2024 and 2025 as reported by the Company in its earnings release for each respective fiscal year. However, in calculating the annual Adjusted EBITDAre growth rate for a fiscal year, the total Adjusted EBITDAre related to any hotel assets disposed of during that fiscal year will be subtracted from that fiscal year and the prior fiscal year. |
(2)
| Equal to the quotient of Net Debt (as defined below) divided by “investments in hotel properties, net plus accumulated depreciation,” as reported in the Company’s consolidated financial statements reported on Form 10-K for the fiscal year ending December 31, 2025. “Net Debt” is defined as “indebtedness” less (w) “cash and cash equivalents,” (x) “restricted cash,” (y) financial assets “due from third-party hotel managers,” and (z) “marketable securities,” each as reported in the Company’s consolidated financial statements reported on Form 10-K for the fiscal year ending December 31, 2025. |
The Compensation Committee believes that the Net Debt / Gross Investment Property Ratio measure (which has also historically been used by Braemar) strengthens the incentive for our executive officers to focus on operating metrics that are critical to the Company’s success.
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Once performance based on the two metrics above is determined, the calculated amount (which may between 0% and 200% of the target award) will be further subject to an absolute total shareholder return (“TSR”) modifier, which may range from 75% to 125% of the otherwise-earned award based on the annualized TSR over the three-year performance period as set forth in the table below (with linear interpolation between the threshold and target, and target and maximum, modifier levels):
| 5% or less | | | 7% | | | 9% or more | |
This structure will provide each grantee with an opportunity to vest from 0% to 250% of the fiscal 2023 target PSU and performance LTIP awards. The awards will be settled in equity or relative TSR,cash as applicable, asultimately determined by the compensation committee. The PSUs will vest on the date that is three years from the date of grant, subject to forfeiture.
(5)Mr. Eubanks became our Chief Financial Officer effective June 14, 2014. Prior to being appointed Chief Financial Officer, Mr. Eubanks had been serving as our Senior Vice President—Finance since June 2011. Compensation Committee. The average value of the 2016 equity awards made for 2015 performance was approximately 40% less than the awards in 2015 made for 2014 performance (excluding Mr. Eubanks whose 2015 award was based on serving as our Chief Financial Officer for approximately one-half of the 2014
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performance year). A summary of the components of the shares awarded in March 20162023 incentive compensation awards to our named executive officers is as follows:
follows. | J. Robison Hays, III | | | 87,338 | | | 2,596,665 | |
| Deric S. Eubanks | | | 43,966 | | | 1,251,343 | |
| Alex Rose | | | 33,307 | | | 947,985 | |
| Mark L. Nunneley | | | 25,314 | | | 720,466 | |
| | | | | | | | | | | | | |
Executive | | Target Performance-based Shares/LTIPs Awarded | | Time-Based Shares/LTIPs Awarded | | Total March 2016 Equity | |
---|
| | Absolute TSR
| | Relative TSR
| | Business Objectives
| | Award for 2015
| |
---|
Monty J. Bennett | | | 115,385 | (1) | | 115,385 | (1) | | 230,772 | (2) | | 461,542 | |
Douglas A. Kessler | | | 60,714 | (3) | | 60,715 | (3) | | 121,428 | (4) | | 242,857 | |
David A. Brooks | | | 44,141 | (3) | | 44,142 | (3) | | 88,282 | (4) | | 176,565 | |
Deric S. Eubanks | | | 40,851 | (3) | | 40,851 | (3) | | 81,701 | (4) | | 163,403 | |
Jeremy Welter | | | 42,713 | (1) | | 42,714 | (1) | | 85,428 | (2) | | 170,855 | |
LTIP Units(1)Represents target number of performance LTIP unit awards ("performance LTIPs"), which may vest from 0% to 200% based on achievement of absolute or relative TSR, as applicable, determined by the compensation committee on the date that is three years from the date of grant, subject to forfeiture. Upon vesting, the LTIP units are convertible into common units at the option of the recipient. Common units are redeemable for cash or, at our option, convertible into shares of our common stock based on a conversion ratio described in the partnership agreement of our operating partnership which, on March 31, 2016, was 0.9543923553 shares of our common stock per common unit.
(2)Represents special LTIP units in our operating partnership that vest in three substantially equal installments on the first three anniversaries following the date of grant. Upon vesting, the LTIP units are convertible into common units at the option of the recipient. Common units are redeemable for cash or, at our option, convertible into shares of our common stock based on a conversion ratio described in the partnership agreement of our operating partnership which, on March 31, 2016, was 0.9543923553 shares of our common stock per common unit.
(3)Represents target number of common stock shares that may be issued pursuant to an award of performance stock units ("PSUs"). The actual number of PSUs to be issued upon vesting can range from 0% to 200% based on achievement of absolute or relative TSR, as applicable, as determined by the compensation committee. The PSUs will vest on the date that is three years from the date of grant, subject to forfeiture.
(4)Represents shares of restricted common stock that vest in three substantially equal installments on the first three anniversaries following the date of grant.
As shown in the table above, the compensation committee determined in 2016 to award half (50%) of the shares/units awarded in the form of time-based shares/units that vest in three equal annual installments following the date of grant, with dividends paid on unvested shares/units, and half (50%) in the form of performance-based shares/units. The performance-based shares/units vest at the end of three years based on the company's shareholder returns: 50% absolute TSR and 50% relative TSR. The award level for achieving target performance is 100% of the target award. The award levels for achieving threshold and maximum performance are 50% and 200% of the target award, respectively. Award levels between the threshold and target performance and between the target and maximum performance are interpolated. Dividends are accrued and paid on the actual number of shares/units vesting in the form of additional shares/units.
The compensation committee also elected to give our executive officers a choice of receiving their time-based equity awards in the form of either restricted stock or LTIP units, or a combination of both. Messrs. Bennett and Welter elected to receive the March 2016 time-based equity grants in the form of LTIP units. We will make dividends and distributions on unvested restricted stock and LTIP units. For the performance-based awards, the executives could choose between PSUs or performance LTIPs, or a
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combination of both. Messrs. Bennett and Welter elected to receive the March 2016 performance-based equity grants in the form of performance LTIP units. Dividends and distributions accrue on unvested PSUs or performance LTIPs and are paid in the form of additional shares/units on the actual number of shares/units that ultimately vest at the end of the three-year performance period.
The LTIP units are a special class of partnership units in our operating partnership called “long-term incentive partnership units.units.” Grants of LTIP units are designed to offer executives the same long-term incentive as restricted stock, while allowing them more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under our stock incentive plan, reducing availability for other equity awards.awards, because LTIP units are convertible into common units of our operating partnership, which may themselves be converted into shares of our common stock based on a conversion ratio of 1:1. As a result, an LTIP unit granted may result in an issuance of one share of our common stock. LTIP units, whether vested or not, receive the same quarterly per unit distributions as common units of our operating partnership, which typically equal per share dividends on our common stock, if any. This treatment with respect to quarterly distributions is analogous to the typical treatment of time-vested restricted stock. (Note that distributions on Performance LTIPs accrue on unvested units and are paid in the form of additional common units of our operating partnership on the actual number of LTIP units that vest.) The key difference between LTIP units and restricted stock is that at the time of award, LTIP units do not have full economic parity with common units but can achieve such parity over time. At the time of the award, executives who receive LTIP units make a $0.05 capital contribution per LTIP unit. Upon the occurrence of certain corporate events, which are not performance relatedperformance-related events, the capital accounts of our operating partnership may be adjusted, allowing for the LTIP units to achieve parity with the common units over time. If such parity is reached, vested LTIP units become convertible into an equal number of common units. Until and unless such parity is reached, the value that an executive will realize for a given number of vested LTIP units is less than the value of an equal number of shares of our common stock.
��
Subject to satisfaction of the vestingapplicable performance- or service-vesting requirements for the LTIP units or Performance LTIPs, the LTIP units will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of the partnership at a time when the company'sCompany’s stock is trading at some level in excess of the price it was trading at on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for the operating partnership. A capital account revaluation generally occurs whenever there is an issuance of additional partnership interests or the redemption of a partnership interest. If a sale, or deemed sale as a result of a capital account revaluation, occurs at a time when the operating partnership'spartnership’s assets have sufficiently appreciated, the LTIP units will achieve full economic parity with the common units. However, in the
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absence of sufficient appreciation in the value of the assets of the operating partnership at the time a sale or deemed sale occurs, full economic parity would not be reached. Until and unless such economic parity is reached, the value that an executive will realize for vested LTIP units will be less than the value of an equal number of shares of our common stock.
As
Review of March 31, 2016, all of the LTIP units issued prior to 2015 have reached economic parity with the common units and have been converted to common units. None of the LTIP units issued in 2015 or 2016 have achieved such parity.Market Data for Peer Companies
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As noted in the Executive Compensation Overview section, we believe ourIncentive compensation decisions should be evaluated by recognizing that the compensation committee grants equity awards following the end offor our fiscal year based on the performance of the prior year and over the longer term. To understand how we pay for performance, equity awards should be aligned with the applicable performance year to which they are related. Using this approach, the total actual compensation for each of the named executive officers serving at the endare determined based on a number of 2015, for the three years ended December 31, 2015, as analyzed byfactors, including a periodic review of the compensation committeelevels in the marketplace for similar positions. In 2019, the Compensation Committee, with the assistance of Gressle & McGinley, our independent compensation consultant, undertook such a review of competitive compensation compared to market, with a particular emphasis on market level of equity compensation.
Competitive pay data is
as follows: | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary(1) | | Bonus(1) | | Equity Based Awards(2) | | Total | |
---|
Monty J. Bennett | | 2015 | | $ | — | | $ | — | | $ | 2,750,000 | | $ | 2,750,000 | |
Chief Executive Officer | | 2014 | | | 800,000 | | | 1,600,000 | | | 4,500,000 | | | 6,900,000 | |
| | 2013 | | | 800,000 | | | 1,600,000 | | | 3,981,934 | | | 6,381,934 | |
Deric S. Eubanks(3) | | 2015 | | | — | | | — | | | 1,018,000 | | | 1,018,000 | |
Chief Financial Officer and Treasurer | | 2014 | | | 282,205 | | | 203,000 | | | 750,000 | | | 1,235,205 | |
Douglas A. Kessler | | 2015 | | | — | | | — | | | 1,513,000 | | | 1,513,000 | |
President | | 2014 | | | 625,000 | | | 937,500 | | | 2,700,000 | | | 4,262,500 | |
| | 2013 | | | 625,000 | | | 937,500 | | | 2,199,996 | | | 3,762,496 | |
David A. Brooks | | 2015 | | | — | | | — | | | 1,100,000 | | | 1,100,000 | |
Chief Operating Officer, | | 2014 | | | 475,000 | | | 593,750 | | | 2,000,000 | | | 3,068,750 | |
General Counsel and Secretary | | 2013 | | | 475,000 | | | 593,750 | | | 1,791,874 | | | 2,860,624 | |
Jeremy Welter | | 2015 | | | — | | | — | | | 1,018,000 | | | 1,018,000 | |
Executive Vice President, | | 2014 | | | 425,000 | | | 382,500 | | | 1,500,000 | | | 2,307,500 | |
Asset Management | | 2013 | | | 425,000 | | | 297,500 | | | 617,400 | | | 1,339,900 | |
(1)Effective withused for reference only to gauge the marketplace for executive compensation in our spin-offindustry. The Compensation Committee does not establish a specific target percentile of Ashford Inc. in November 2014, we no longer pay salary or bonus compensation to our executive officers or employees. However, we do grantmarket for our executives and the executives and employees of our advisor equity awards, if andgenerally seeks to the extent determined appropriate by our compensation committee.
(2)Represents estimated valuation as analyzed byprovide the compensation committeelevels needed to retain our exceptional executive team and reward appropriately for performance.
The specific peers used to assess competitive pay include other hospitality REITs with similar assets. The hospitality REITs included in our assessment of restricted stock, LTIP unit, PSUcompetitive pay include: Chatham Lodging Trust, DiamondRock Hospitality Company, Hersha Hospitality Trust, Host Hotels & Resorts, Inc., Park Hotels and target numberResorts, Inc., Pebblebrook Hotel Trust, RLJ Lodging Trust, Summit Hotel Properties, Inc., Sunstone Hotel Investors, Inc., and Xenia Hotels & Resorts, Inc.
The Compensation Committee also assessed the pay practices of these hospitality REITs in evaluating 2022 incentive compensation grant decisions for 2021 performance LTIP awards made following the end of the fiscal year indicated based on the performance of the companyand 2023 incentive compensation grant decisions for the prior year. These grants are subject to vesting over a period of time generally commencing on the date of their issuance.
(3)Mr. Eubanks was appointed Chief Financial Officer and Treasurer effective June 14, 2014.2022 performance.Stock Ownership Guidelines
Our
corporate governance guidelinesCorporate Governance Guidelines provide ownership guidelines for
our directors as well as our executive officers. The guidelines state that
each member of the
boardChief Executive Officer should hold an amount of our common stock
or other equity equivalent having a
value in excess of three times his annual board retainer fee (excluding any portion of the retainer fee representing additional compensation for being a committee chairman), and the chief executive officer should hold an amount of our common stock having a value in excess of six times his annual base salary. The guideline for our president is stock ownership of an amount of our common stock having a value in excess of four times his annual base salary and each other executive is required by our guidelines to hold common stock having amarket value in excess of three times his annual base
salary.salary paid by our advisor in effect at the time of his appointment as Chief Executive Officer and each other executive officer should hold common stock or other equity equivalent having a market value in excess of one-and-one half times his annual base salary paid by our advisor in effect at the time of his appointment to such office. The guidelines provide that ownership of common units or LTIP units
(including performance LTIP units) in our operating partnership constitute
"common stock"“common stock” for purposes of compliance with the
guideline. Any future board member or executive officer will beguideline based on a conversion ratio of 1:1. Executive officers are expected to achieve compliance within
threefour years of being
appointedappointed. Once an executive officer has met his or
elected,her guideline, he or she will not be considered to be out of compliance with the guideline as
applicable. Currently, alla result of
our
Tablestock price volatility. The Company calculates the minimum number of Contents
board membersshares necessary to meet compliance with the guidelines, and that number of shares will be the number required to be held through the remaining term of an executive’s tenure. Although an executive officers satisfy ourofficer may not sell any common stock ownershipgranted to them in connection with their service to the Company until the executive officer is in compliance with the guidelines, or are withinno executive officer is required to acquire shares on the three-year ramp-up period for compliance.
open market (or is prohibited from selling shares acquired on the open market) in order to meet compliance with the guidelines. As a group,of December 31, 2022, each of our named executive officers have demonstratedhad stock ownership that met the guidelines.
Hedging and Pledging Policies
We maintain a
commitment to the company through long tenurepolicy that prohibits our directors and
significant equity ownership levelsexecutive officers from holding Company securities in a margin account or pledging Company securities as
a multiple of salary paid to them by our advisor that are well in excess of market best practices. Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally precludes a publicly held corporation from a federal income tax deductioncollateral for a taxable year for compensation in excess of $1 million paid toloan. Our policy also prohibits our chief executive officer or any of our other nameddirectors and executive officers from engaging in speculation with the exception of our chief financial officer. Certain performance-based compensation exceptions are available; however, our company is structured such that compensation is not paidrespect to Company securities, and deducted by the corporation, but at the operating partnership level. The IRS has previously issued a private letter ruling holding that Section 162(m) does not apply to compensation paid to employees of a REIT's operating partnership. Consistent with that ruling, we have taken a position that compensation expense paid and incurred at the operating partnership level is not subject to the Section 162(m) limit. As such, the compensation committee does not believe that it is necessary to meet the requirements of the performance-based compensation exception to Section 162(m). As private letter rulings are applicable only for the taxpayer who obtains the ruling, and we have not obtained a private letter ruling addressing this issue, there can be no assurance that the IRS will not challenge our position that Section 162(m) does not apply to compensation paid at the operating partnership level. We also consider the accounting impact of all compensation paid tospecifically prohibits our executives from engaging in any short-term, speculative securities transactions involving Company securities and equity awards are given special consideration pursuant to FASB ASC Topic 718.
engaging in hedging transactions.
Adjustment or Recovery of Awards
Under the company'sCompany’s clawback policy, that was adopted in 2012, if the companyCompany is required to prepare an accounting restatement due to the material noncompliance of the companyCompany with any financial reporting requirements, then the compensation committee,Compensation Committee, or, in the discretion of the board of directors,Board, any other committee or body of the board of directorsBoard consisting only of independent
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directors, may require any Section 16 reporting officer, as well as any other officer holding the title of senior vice president or a more senior title whose job description includes the function of accounting or financial reporting (each, a
"“covered officer"”), during the three-year period preceding the publication of the restated financial statement to reimburse the companyCompany for any annual cash bonus and long-term equity incentive compensation earned during the prior three-year period in such amounts that the independent director committee determines to be in excess of the amount that such covered officer would have received had such compensation been calculated based on the financial results reported in the restated financial statement.The independent director committee may take into account any factors it deems reasonable, necessary, and in the best interests of the
companyCompany to remedy
theany misconduct and prevent its recurrence. In determining whether to seek recoupment of any previously paid excess compensation and how much to recoup from each covered officer, the independent director committee must consider the accountability of the applicable covered officer, any conclusion by the
Independent Director Committeeindependent director committee whether a covered officer engaged in wrongdoing, committed grossly negligent acts, omissions or engaged in willful misconduct, as well as any failure of the covered officer to report another
person'sperson’s grossly negligent acts, omissions, or willful misconduct. In addition, if a covered officer engaged in intentional misconduct or violation of
companyCompany policy that contributed to the award or payment of any annual cash bonus or
long term equitylong-term incentive compensation to him or her that is greater than would have been paid or awarded in the absence of the misconduct or violation, the
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independent director committee may take other remedial and recovery action permitted by applicable law, as determined by such committee.
Under the Dodd-Frank Act,
there may be additionalthe SEC issued a rule in October 2022 directing the NYSE to adopt listing standards regarding the clawback of equity awards in certain circumstances. The NYSE released its proposed listing standards in response to the SEC rule on February 22, 2023, and those listing standards must become effective no later than November 28, 2023. Before those standards become effective, the Company will consider what changes to its recoupment
obligations required by the company. When final guidance is available as to these requirements, the company intends topolicies are appropriate in light of those new standards and it will otherwise modify its recoupment policies
accordingly. Hedgingif and Pledging Policies
Pursuantas needed to comply with those standards.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally precludes a publicly held corporation from a federal income tax deduction for a taxable year for compensation in excess of $1 million paid to its “covered employees,” which generally include its chief executive officer, chief financial officer, its next three most highly compensated executive officers, and any individual who is (or was) a “covered employee” for any taxable year beginning after December 31, 2016.
Our Company is structured such that compensation is not paid and deducted by the corporation, but at the Ashford Hospitality Trust OP level. Section 162(m)’s deduction limitation may apply to our
Codedistributive share of
EthicsAshford Hospitality Trust OP’s deduction for compensation paid to covered employees. The deductibility of compensation is only one of a multitude of factors that we consider in establishing compensation, and
Corporate Governance Guidelines, we
maintain a policyand our Compensation Committee believe that
prohibitsit is important to retain flexibility to award compensation to our
directorsemployees that appropriately incentivizes their retention, encourages performance, and
executive officers from holding company securities in a margin accountaligns with our stockholders’ interests, even if the deductibility of that compensation is limited (whether under Section 162(m) or
pledging company securities as collateral for a loan. "Cashless exercises"otherwise). We also consider the accounting impact of
options are requiredall compensation paid to
receive prior approval of our general counsel. Our policy also prohibits our directors and executive officers from engaging in speculation with respect to company securities, and specifically prohibits our executives,
from engaging in any short-term, speculative securities transactions involving company securities, including in-and-out trading, engaging in short sales or "sales against the box," buying or selling put or call options, and
engaging in hedging transactions.equity awards are given special consideration pursuant to FASB ASC Topic 718.
Compensation Risk Assessment
The compensation committeeCompensation Committee has overall responsibility for overseeing the risks relating to our compensation policies and practices. The committeeCompensation Committee uses its independent compensation consultant, Gressle & McGinley, to independently consider and analyze the extent, if any, to which our compensation policies and practices might create risks for the company,Company, as well as policies and practices that could mitigate any such risks. After conducting this review in early 2016,2022, the committeeCompensation Committee has determined that none of our compensation policies and practices create any risks that are reasonably likely to have a material adverse effect on our company.Company.
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COMPENSATION COMMITTEE REPORT
Compensation Committee Report
The
compensation committeeCompensation Committee has reviewed and discussed the
compensation discussionforegoing Compensation Discussion and
analysisAnalysis disclosure with
Ashford'sthe Company’s management, and based on this review and discussion, the
compensation committeeCompensation Committee has recommended to the
board of directorsBoard that the
compensation discussionCompensation Discussion and
analysisAnalysis be included in this proxy statement.
| | | | COMPENSATION COMMITTEE | |
| | | | | |
| | | | Alan L. Tallis, Chairman
Frederick J. Kleisner
Kamal Jafarnia | |
| | | | | | | | |
| 34 | COMPENSATION COMMITTEE |
| |
Benjamin J. Ansell, M.D., Chairman
Thomas E. Callahan
Kamal Jafarnia
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SUMMARY COMPENSATION TABLE
Summary Compensation Table
The following table sets forth the fiscal 2022, 2021 and 2020 compensation paid to or earned by the ChairmanCompany’s named executive officers.
| J. Robison Hays, III | | | 2022 | | | $― | | | $852,063 | | | $467,830 | | | $1,319,893 | |
| President and Chief Executive Officer | | | 2021 | | | $― | | | $3,763,996 | | | $― | | | $3,763,996 | |
| | | | 2020 | | | $― | | | $195,187 | | | $― | | | $195,187 | |
| Deric S. Eubanks | | | 2022 | | | $― | | | $480,613 | | | $263,882 | | | $744,494 | |
| Chief Financial Officer | | | 2021 | | | $― | | | $1,285,748 | | | $― | | | $1,285,748 | |
| | | | 2020 | | | $― | | | $195,187 | | | $― | | | $195,187 | |
| Alex Rose(3)
Executive Vice President, General Counsel and Secretary | | | 2022 | | | $― | | | $193,796 | | | $106,404 | | | $300,200 | |
| Mark L. Nunneley | | | 2022 | | | $― | | | $279,062 | | | $153,221 | | | $432,283 | |
| Chief Accounting Officer | | | 2021 | | | $― | | | $676,711 | | | $― | | | $676,711 | |
| | | | 2020 | | | $― | | | $97,607 | | | $― | | | $97,607 | |
(1)
| We do not pay salary or bonus compensation to our executive officers, including our named executive officers. However, we grant our executives and the executives and employees of our advisor and its subsidiaries equity-based (and, starting in 2022, certain cash-based) incentive compensation awards, if and to the extent determined appropriate by our Compensation Committee. No allocation of the total compensation paid and benefits provided by Ashford Inc. to its officers and employees who are our named executive officers is made for the time spent by such persons on behalf of either our Company or Braemar. As a result, we have not included any amount of the compensation paid and benefits provided to such persons by Ashford Inc. in the foregoing summary compensation table. |
(2)
| Represents the total grant date fair value of restricted stock awards, LTIP unit awards, PSUs, and Performance LTIPs made in the fiscal year indicated (with respect to prior year performance), computed in accordance with FASB ASC Topic 718 without regard to the effects of forfeiture. Assumptions used in the calculation of these amounts are described in Notes 2, 13, and 15 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022. With respect to the PSUs and Performance LTIPs, the amount reflected in the Summary Compensation Table assumes that the required performance goals will be achieved at target levels. The following table provides the grant date fair values of the Performance LTIPs and the PSUs, issued to the named executive officers in 2022, assuming maximum performance is achieved. |
| J. Robison Hays, III | | | $2,130,158 | |
| Deric S. Eubanks | | | $1,201,532 | |
| Alex Rose | | | $484,490 | |
| Mark L. Nunneley | | | $697,654 | |
(3)
| Mr. Rose first became a named executive officer in 2022. |
(4)
| Represents payments for 2022 under deferred cash awards granted by the Company in 2022. The terms of the deferred cash awards granted in 2022, which provide for potential payments over three years, are described in the Compensation Discussion and Analysis in our 2022 proxy statement, filed with the SEC on March 30, 2022. |
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2022 Grants of
the company's boardPlan-Based Awards | J. Robison Hays, III | | | 3/15/2022 | | | 56,653 | | | 151,075 | | | 377,688 | | | ― | | | $852,063 | |
| Deric S. Eubanks | | | 3/15/2022 | | | 31,956 | | | 85,215 | | | 213,038 | | | ― | | | $480,613 | |
| Alex Rose | | | 3/15/2022 | | | 12,885 | | | 34,361 | | | 85,903 | | | ― | | | $193,796 | |
| Mark L. Nunneley | | | 3/15/2022 | | | 18,555 | | | 49,479 | | | 123,698 | | | ― | | | $279,062 | |
(1)
| Amounts represent the threshold, target, and maximum number of PSUs or performance LTIPs, at the election of the recipient, pursuant to the March 2022 equity awards for 2021 performance. Subject to forfeiture and the achievement of the applicable performance-based vesting criteria, these awards will vest on December 31, 2024. |
(2)
| Represents LTIP units or restricted common stock, at the election of the recipient, that vest in three substantially equal installments on the first three anniversaries following the date of grant, with vesting generally conditioned on the award recipient continuing to be an employee of Ashford Inc. or its affiliates on each such vesting date. |
(3)
| Computed in accordance with FASB ASC Topic 718, excluding the effect of forfeitures and assuming the target level of achievement. |
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Outstanding Equity Awards at 2022 Fiscal Year-End The following table sets forth information concerning outstanding equity awards for each of directors as well as the company's Chief Executive Officer, Chief Financial Officer and the company's three other most highly compensatedour named executive officers as of December 31, 2022. All unit/share counts are shown as adjusted following the Company’s 1:10 reverse stock split completed on July 16, 2021.
| J. Robison Hays, III | | | 333(2) | | | $1,489 | | | ― | | | $― | |
| | | | 46,602(3) | | | $208,311 | | | 16,032(4) | | | $71,663 | |
| | | | — | | | $― | | | 56,654(5) | | | $253,243 | |
| Deric S. Eubanks | | | 334(2) | | | $1,493 | | | ― | | | $― | |
| | | | 15,472(3) | | | $69,160 | | | 8,703(4) | | | $38,902 | |
| | | | — | | | $― | | | 31,956(5) | | | $142,843 | |
| Alex Rose | | | — | | | $― | | | 12,886(5) | | | $57,600 | |
| Mark L. Nunneley | | | 166(2) | | | $742 | | | — | | | $― | |
| | | | 8,144(3) | | | $36,404 | | | 4,581(4) | | | $20,477 | |
| | | | — | | | $― | | | 18,555(5) | | | $82,941 | |
(1)
| Market value of unvested service-based and performance-based awards is based on the closing share price of our common stock on the NYSE on December 30, 2022 of $4.47. |
(2)
| These restricted shares or LTIPs were granted on March 11, 2020, with an initial vesting term of three years. One-third of the awards initially granted vested on March 11, 2021; one-third vested on March 11, 2022; and the remaining one-third vested on March 11, 2023. |
(3)
| These restricted shares or LTIPs were granted on May 12, 2021, with an initial vesting term of three years. One-third of the awards initially granted vested on March 15, 2022; one-third vested on March 15, 2023; and the remaining one-third will vest on March 15, 2024. |
(4)
| These PSU awards or Performance LTIPs were granted on May 12, 2021, and assuming continued service and achievement of the specified performance-based vesting criteria, the awards will vest on December 31, 2023. Amount reflects the threshold payout level, which is 37.5% of the target level; however, the actual number of PSUs or Performance LTIPs that will vest could range from 0% to 250% of the target number. |
(5)
| These PSU awards or Performance LTIPs were granted on March 15, 2022 and assuming continued service and achievement of the specified performance-based vesting criteria, the awards will vest on December 31, 2024. Amount reflects the threshold payout level, which is 37.5% of the target level; however, the actual number of PSUs or Performance LTIPs that will vest could range from 0% to 250% of the target number. |
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Equity Awards Vested in
fiscal years 2015, 2014 and 2013 for services rendered in all capacities. | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary(1) | | Bonus(1) | | Equity Based Awards(2) | | Total | |
---|
Monty J. Bennett | | | 2015 | | $ | — | | $ | — | | $ | 4,500,000 | | $ | 4,500,000 | |
Chief Executive Officer | | | 2014 | | | 800,000 | | | 1,600,000 | | | 3,981,934 | | | 6,381,934 | |
| | | 2013 | | | 800,000 | | | 1,600,000 | | | 1,756,500 | | | 4,156,500 | |
Deric S. Eubanks(3) | | | 2015 | | | — | | | — | | | 750,000 | | | 750,000 | |
Chief Financial Officer and Treasurer | | | 2014 | | | 282,205 | | | 203,000 | | | 351,925 | | | 834,913 | |
Douglas A. Kessler | | | 2015 | | | — | | | — | | | 2,700,000 | | | 2,700,000 | |
President | | | 2014 | | | 625,000 | | | 937,500 | | | 2,199,996 | | | 3,762,496 | |
| | | 2013 | | | 625,000 | | | 937,500 | | | 2,927,500 | | | 4,490,000 | |
David A. Brooks | | | 2015 | | | — | | | — | | | 2,000,000 | | | 2,000,000 | |
Chief Operating Officer, | | | 2014 | | | 475,000 | | | 593,750 | | | 1,791,874 | | | 2,860,624 | |
General Counsel and Secretary | | | 2013 | | | 475,000 | | | 593,750 | | | 2,576,200 | | | 3,644,950 | |
Jeremy Welter | | | 2015 | | | — | | | — | | | 1,500,000 | | | 1,500,000 | |
Executive Vice President, | | | 2014 | | | 425,000 | | | 382,500 | | | 617,400 | | | 1,424,900 | |
Asset Management | | | 2013 | | | 425,000 | | | 297,500 | | | 1,756,500 | | | 2,479,000 | |
Fiscal Year 2022(1)Effective with our spin-off of Ashford Inc. in November 2014, we no longer pay salary or bonus compensation to our executive officers or employees. However, we do grant our executives and the executives and employees of our advisorThe following table provides information concerning equity awards if and to the extent determined appropriategranted by our compensation committee.
(2)Represents the total grant date fair value of restricted stock, LTIP unit, PSU and performance LTIP unit awards made in the fiscal year indicated (with respect to prior year performance), computed in accordance with FASB ASC Topic 718 without regard to the effects of forfeiture. Assumptions used in the calculation of these amounts are described in Note 12 to the company's audited financial statements for the fiscal year end December 31, 2015, included in the company's Annual Report on Form 10-K that was filed with the SEC on February 29, 2016. These grants are subject to vesting over a period of time generally commencing on the date of their issuance.
(3)Mr. Eubanks was appointed Chief Financial Officer and Treasurer effective June 14, 2014.
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GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | |
Name | | Grant Date | | All Other Equity Awards: Number of Shares of Stock or LTIPs(1) | | Grant Date Fair Value of Equity Awards(2) | |
---|
Monty J. Bennett(3) | | March 20, 2015 | | | 478,969 | | $ | 4,500,000 | |
Douglas A. Kessler | | March 20, 2015 | | | 265,748 | | | 2,700,000 | |
David A. Brooks | | March 20, 2015 | | | 196,850 | | | 2,000,000 | |
Deric S. Eubanks | | March 20, 2015 | | | 73,819 | | | 750,000 | |
Jeremy Welter(3) | | March 20, 2015 | | | 159,656 | | | 1,500,000 | |
(1)Represents LTIP units or restricted common stock, at the election of the recipient, that vest in three substantially equal installments on the first three anniversaries following the date of grant.
(2)Computed in accordance with FASB ASC Topic 718, excluding the effect of forfeitures.
(3)Elected to receive LTIP unit awards that, upon vesting, are convertible into common units at the option of the recipient. Common units are redeemable for cash or, at our option, convertible into shares of our common stock based on a conversion ratio described in the partnership agreement of our operating partnership which, on March 31, 2016, was 0.9543923553 shares of our common stock per common unit.
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | |
Name | | Number of Equity Awards That Had Not Vested at December 31, 2015 | | Market Value of Equity Awards That Had Not Vested at December 31, 2015 | |
---|
Monty J. Bennett | | | 50,000 | (2) | $ | 315,500 | |
| | | 240,891 | (3) | | 1,520,022 | |
| | | 478,969 | (5) | | 3,022,294 | |
| | | | | | | |
| | | | | $ | 4,857,817 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Deric S. Eubanks | | | 10,000 | (2) | $ | 63,100 | |
| | | 21,156 | (3) | | 133,494 | |
| | | 73,819 | (5) | | 465,798 | |
| | | | | | | |
| | | | | $ | 662,392 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Douglas A. Kessler | | | 83,334 | (2) | $ | 525,838 | |
| | | 132,490 | (3) | | 836,012 | |
| | | 265,748 | (5) | | 1,676,870 | |
| | | | | | | |
| | | | | $ | 3,038,719 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
David A. Brooks | | | 73,334 | (2) | $ | 462,738 | |
| | | 108,401 | (3) | | 684,010 | |
| | | 196,850 | (5) | | 1,242,124 | |
| | | | | | | |
| | | | | $ | 2,388,871 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Jeremy Welter | | | 10,000 | (1) | $ | 63,100 | |
| | | 50,000 | (2) | | 315,500 | |
| | | 40,000 | (4) | | 252,400 | |
| | | 159,656 | (5) | | 1,007,429 | |
| | | | | | | |
| | | | | $ | 1,638,429 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
(1)These equity awards were granted on March 24, 2011, with equal annual vesting beginning on January 1, 2014. Of these awards, one-third vested on January 1, 2014; one-third vested on January 1, 2015; and the remaining one-third vested on January 1, 2016.
(2)These equity awards were granted on March 4, 2013 with an initial vesting term of three years. One-third of these awards vested on March 4, 2014; one-third vested on March 4, 2015; and the remaining one-third vested on March 4, 2016.
(3)These equity awards were granted on February 27, 2014, with an initial vesting term of three years. One-third of these awards vested on February 27, 2015; one-third vested on February 27, 2016; and the remaining one-third will vest on each February 27, 2017.
(4)These equity awards were granted on April 23, 2014 with an initial vesting term of three years. One-third of these awards vested on April 23, 2015; one third of these awards vested on April 23, 2016; and the remaining one-third will vest one-third on April 23, 2017.
(5)These equity awards were granted on March 20, 2015 with an initial vesting term of three years. One-third of these awards vested March 20, 2016; one-third will vest on March 20, 2017; and the remaining one-third will vest on March 20, 2018.
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EQUITY AWARDS VESTED DURING 2015
| | | | | | | |
Name | | Stock Awards: Number of Equity Awards(1) Acquired on Vesting | | Value Realized on Vesting | |
---|
Monty J. Bennett | | | 437,112 | | $ | 4,432,826 | |
Deric S. Eubanks | | | 48,327 | | | 483,811 | |
Douglas A. Kessler | | | 319,994 | | | 3,258,657 | |
David A. Brooks | | | 289,618 | | | 2,940,786 | |
Jeremy Welter | | | 125,000 | | | 1,172,650 | |
(1)Includes LTIP unitsus that vested during 2015. All LTIP units that vested during 20152022. None of the named executive officers hold any stock option awards.
| J. Robison Hays, III | | | 33,042 | | | $267,344 | |
| Deric S. Eubanks | | | 8,427 | | | $68,454 | |
| Alex Rose | | | — | | | $— | |
| Mark L. Nunneley | | | 4,428 | | | $35,967 | |
(1)
| This amount includes common stock and also vested LTIP units based upon the market value of our common stock upon vesting. Because of the nature of LTIP units, the actual value upon vesting, if any, may have been less, and the actual amount realized won’t be determinable until the units are redeemable. |
We do not provide pension or retirement benefits to our named executive officers.
Nonqualified Deferred Compensation Our named executive officers have
reached economic parity.not received any nonqualified deferred compensation.
TablePotential Payments Upon Termination of Contents
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL
Executive Officers
In connection with the spin-offEmployment or Change of Ashford Inc. in November 2014, each executive entered intoControl
We are not a
newparty to any employment
agreementagreements with our
advisor.executive officers. As a result,
all payments we
do not have any obligationwould need to make
any payments to
the chairman of our board or any named executive officer upon termination of employment or following a change of control
other than the acceleration of outstanding equityare pursuant to awards
as reflected in the Outstanding Equity Awards at Fiscal Year-end table above. Ourgranted under our equity incentive plan and the award agreements provideissued thereunder (which, for our executive officers, incorporate by reference certain acceleration of vesting provisions contained in the employment agreements that stock options, restricted stockeach executive officer has entered into with our advisor).
Generally, our equity awards (other than performance awards) and LTIP unitsour deferred cash awards will fully vest upon (i) the death or disability of the named executive officer; (ii) the termination or removal of the named executive officer byas an employee or consultant of the companyCompany or an affiliate without "cause"“cause” (as defined therein) or by the named executive officer for "good reason"“good reason” (as defined therein), (ii); or (iii) the termination removalwithout “cause” or resignation for any reason of the named executive officer for any reasonas an employee or consultant of the Company or an affiliate within one year from the effective date of a change inof control of the company, or (iii) the death or disability of the named executive officer. Company.
The award agreements for the PSUs and Performance LTIPs granted to the named executive officers in 2016 providewill be eligible for accelerated vesting upon (i) the termination or removal of the named executive officer as an employee of the Company by the companyCompany without cause“cause” (including a termination of the advisory agreement with our advisor) or by the named executive officer for good“good reason, or” (ii) the death or disability of the named executive officer.officer, (iii) a change of control of the Company, (iv) a change of control of our advisor, if such change of control results in the vesting of the award under the terms of any employment agreement that the named executive officer has with our advisor, and (v) an involuntary termination of employment or the nonrenewal of the employment agreement to the extent such event causes vesting of the award under the employment agreement the named executive officer has with our advisor. (Our advisor is an affiliate under our equity incentive plan.) The number of PSUs or Performance LTIPs that vests is generally calculated based on performance at the greater of target or actual performance (based on a truncated performance period), except that in the case of clauses (iii) and (iv), the number is based solely on actual performance (based on a truncated performance period).
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For the purposes of the plan, the following definitions apply:
"Cause" has, with respect to any named executive officer, the same definition as in any employment agreement that such named executive officer has with the company, Ashford Inc. or any of their respective affiliates. If such named executive officer is not a party to such an employment agreement, generally, (i) the willful commission of a crime or act that results in substantial economic damage to, or substantial injury to the business reputation of, the company, or an affiliate; (ii) the commission of an act of fraud in the performance of such participant's duties on behalf of the company or an affiliate; or (iii) the continuing willful failure of a participant to perform his or her duties (other than for incapacity due to physical or mental illness) after written notice by the compensation committee and a reasonable opportunity for such participant to be heard and cure such failure.
A "change of control" of the company is deemed to have occurred when:
(i) any person other than (A) the company or any of its subsidiaries, (B) any employee benefit plan of the company or any of its subsidiaries, (C) Remington or an affiliate, (D) a company owned, directly or indirectly, by stockholders of the company in substantially the same proportions as their ownership of the company, or (E) an underwriter temporarily holding securities pursuant to an offering of such securities, becomes the beneficial owner, directly or indirectly, of securities of the company representing 30% or more of the shares of voting stock of the company then outstanding; provided, however, that an initial public offering of common stock will not constitute a change of control;
(ii) the consummation of any merger, organization, business combination or consolidation of the company or one of its subsidiaries with or into any other company, other than a merger, reorganization, business combination or consolidation which would result in the holders of the voting securities of the company outstanding immediately prior thereto holding securities which represent immediately after such merger, reorganization, business combination or consolidation more than 50% of the combined voting power of the voting securities of the company or the surviving company or the parent of such surviving company;
(iii) the consummation of a sale or disposition by the company of all or substantially all of the company's assets, other than a sale or disposition if the holders of the voting securities of the company outstanding immediately prior thereto hold securities immediately thereafter which represent more than 50% of the combined voting power of the voting securities of the acquiror, or
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parent of the acquiror, of such assets, or the stockholders of the company approve a plan of complete liquidation or dissolution of the company; or
(iv) individuals who, as of the effective date of the Ashford Hospitality Trust, Inc. 2011 Stock Incentive Plan, constituted our board of directors cease for any reason to constitute at least a majority of our board of directors; provided, however, that any individual becoming a director subsequent to the effective date whose election by our board of directors was approved by a vote of at least a majority of the directors then comprising the board is considered as though such individual were a member of the initial board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than our board of directors.
"Good reason"“Cause” has, with respect to a named executive officer, the same definition as in any employment agreement that such named executive officer has with the company. IfCompany, Ashford Inc., or any of their respective affiliates. In the employment agreements that our named executive officers have with our advisor, “cause” generally means the named executive officer’s:
(i)
| conviction of, or entry of a plea of guilty or nolo contendere to, a felony (exclusive of a conviction, plea of guilty, or plea of nolo contendere arising under a statutory provision imposing criminal liability on a per se basis due to any offices held by the named executive officer pursuant to the employment agreement, so long as any act or omission of the named executive officer with respect to such matter was not taken or omitted in contravention of any applicable policy or directive of our advisor’s board of directors); |
(ii)
| willful breach of duty of loyalty which is materially detrimental to our advisor or any entity that it advises, which is not cured within 30 days following written notice thereof; |
(iii)
| willful failure to perform or adhere to explicitly stated duties or guidelines of employment or to follow the lawful directives of our advisor, which is not cured within 30 days following written notice thereof; |
(iv)
| gross negligence or willful misconduct in the performance of duties which is not cured within 30 days following written notice thereof; |
(v)
| willful commission of an act of dishonesty resulting in material economic or financial injury to our advisor or any entity that it advises, or willful commission of fraud; or |
(vi)
| chronic absence from work for reasons other than illness which is not cured within 30 days following written notice thereof. |
A “change of control” of the Company is deemed to have occurred when:
(i)
| any person other than (A) the Company or any of its subsidiaries, (B) any employee benefit plan of the Company or any of its subsidiaries, (C) Ashford Inc. or an affiliate, (D) a company owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company, or (E) an underwriter temporarily holding securities pursuant to an offering of such securities, becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30% or more of the shares of voting stock of the Company then outstanding; |
(ii)
| the consummation of any merger, organization, business combination, or consolidation of the Company or one of its subsidiaries with or into any other company, other than a merger, reorganization, business combination, or consolidation which would result in the holders of the voting securities of the Company outstanding immediately prior thereto holding securities which represent immediately after such merger, reorganization, business combination, or consolidation more than 50% of the combined voting power of the voting securities of the Company or the surviving company or the parent of such surviving company; |
(iii)
| the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition if the holders of the voting securities of the Company outstanding immediately prior thereto hold securities immediately thereafter which represent more than 50% of the combined voting power of the voting securities of the acquiror, or parent of the acquiror, of such assets, or the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company; or |
(iv)
| individuals who constitute our Board cease for any reason to constitute at least a majority of our Board; provided, however, that any individual becoming a director whose election by our Board was approved by a vote of at least a majority of the directors then comprising the Board is considered as though such individual were a member of the initial Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than our Board. |
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“Good reason” has, with respect to a named executive officer, the same definition as in any employment agreement that such named executive officer has with the Company, Ashford Inc., or any of their respective affiliates. In the employment agreements that our named executive officers have with our advisor, “good reason” generally means:
(i)
| the assignment to the named executive officer of any duties, responsibilities, or reporting requirements (or, in the case of Mr. Hays, any title or directives) inconsistent with his or her position, or any material diminishment of the named executive officer’s duties, responsibilities, or status; |
(ii)
| a reduction by our advisor in the named executive officer’s base salary or target bonus; |
(iii)
| the requirement that the principal place of business at which the named executive officer performs his or her duties be changed to a location outside the greater Dallas metropolitan area; or |
(iv)
| any material breach by the advisor of the employment agreement. |
The following table sets forth the value of the equity and deferred cash awards held by the Company’s named executive officers as of December 31, 2022 whose vesting would accelerate in the circumstances described above, assuming a common stock value of $4.47 per share, the closing share price of the common stock as of December 30, 2022, and, as applicable, that the outstanding performance-based awards are paid out at the target level, other than the performance LTIPs, which assume the maximum level.
| J. Robison Hays, III | | | $1,879,365 | | | $3,024,825 | |
| Deric S. Eubanks | | | $1,506,017 | | | $1,654,434 | |
| Alex Rose | | | $153,594 | | | $366,401 | |
| Mark L. Nunneley | | | $607,529 | | | $951,117 | |
(1)
| Values assume that the outstanding performance-based awards are paid out at the target level, other than the performance LTIPs, which assume the maximum level. |
In August 2015, the SEC issued final rules implementing the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require U.S. publicly-traded companies to disclose the ratio of their Chief Executive Officer’s compensation to that of their median employee. Disclosure pursuant to such rules is not included herein because we do not have any employees.
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Pay Versus Performance Disclosure
| (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | |
| 2022 | | | $1,319,893 | | | $— | | | $476,646 | | | $— | | | $492,326 | | | $302,819 | | | $1.60 | | | $76.50 | | | $(153,204) | | | $287,347 | |
| 2021 | | | $3,763,996 | | | $— | | | $1,202,262 | | | $— | | | $1,268,831 | | | $410,127 | | | $3.44 | | | $90.32 | | | $(267,864) | | | $113,644 | |
| 2020 | | | $195,187 | | | $439,170 | | | $(321,037) | | | $(981,252) | | | $261,773 | | | $(200,449) | | | $9.28 | | | $76.40 | | | $(520,516) | | | $(54,927) | |
(1)
| For a reconciliation of Adjusted EBITDAre to a measure under GAAP in the United States, see Annex A. |
(2)
| Mr. Hays was PEO in 2022, 2021, and during 2020, the PEO role changed from Mr. Kessler to Mr. Hays. |
(3)
| 2022: Messrs. Eubanks, Nunneley and Rose; 2021: Messrs. Eubanks, Haiman, Nunneley and Welter; 2020: Messrs. Eubanks, Haiman, Nunneley and Welter. |
(4)
| FTSE NAREIT Lodging & Resorts Index |
(5)
| Compensation Actually Paid is the summary compensation table total for the PEO (column (b) above) and average summary compensation table total for the Non-PEO NEOs (column (d) above), as applicable, with the following adjustments to the value of equity adjusted as follows pursuant to Item 402(v)(2)(iii)(C) of Regulation S-K: |
| Summary Compensation Table Total | | | $195,187 | | | $439,170 | | | $3,763,996 | | | $1,319,893 | | | $261,773 | | | $1,268,831 | | | $492,326 | |
| SCT Reversal | | | $(195,187) | | | $(439,170) | | | $(3,763,996) | | | ($852,063) | | | $(261,773) | | | $(1,268,831) | | | $(317,823) | |
| New awards outstanding | | | $112,600 | | | $— | | | $1,319,508 | | | $815,805 | | | $131,367 | | | $520,705 | | | $304,299 | |
| Change in value of prior-year awards | | | $(284,210) | | | $— | | | $(103,408) | | | ($705,726) | | | $(228,419) | | | $(112,679) | | | $(169,653) | |
| New awards vested during the year | | | $— | | | $— | | | $(16,290) | | | $— | | | $— | | | $— | | | $— | |
| Vested prior-year awards | | | $(168,072) | | | $(331,950) | | | $6,318 | | | ($101,263) | | | $(112,878) | | | $5,104 | | | $(6,329) | |
| Forfeitures | | | $— | | | $(695,724) | | | $(3,866) | | | $— | | | $— | | | $(3,003) | | | $— | |
| Dividends | | | $18,645 | | | $46,422 | | | $— | | | $— | | | $9,480 | | | $— | | | $— | |
| Compensation Actually Paid | | | $(321,037) | | | $(981,252) | | | $1,202,262 | | | $476,646 | | | $(200,449) | | | $410,127 | | | $302,819 | |
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Relationship Between Compensation Actually Paid (CAP) and Financial Performance Measures in the Pay Versus Performance Table
Total Shareholder Return is calculated assuming a party$100 investment in the Company at the beginning of the period, calculated through the end of the applicable year shown based on the Company’s share price and assuming the reinvestment of any dividends during the applicable measurement period.
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Tabular List of Financial Performance Measures
The following financial performance measures in our assessment represent the three most important performance measures used by us to suchlink company performance to the compensation actually paid to the applicable named executive officer for 2022.
1. Adjusted EBITDAre
2. Revenue
3. EBITDA Flow
| | | | | |
| | | | 2023 Proxy Statement 43 | |
PROPOSAL NUMBER TWO-ADVISORY APPROVAL OF EXECUTIVE COMPENSATION We are providing stockholders an employment agreement, "good reason" means terminationopportunity to cast a non-binding advisory vote on executive compensation (sometimes referred to as “say on pay”). This proposal allows the Company to obtain the views of employment or service under anystockholders on the design and effectiveness of our executive compensation program. Your advisory vote will serve as an additional tool to guide the Compensation Committee and our Board in continuing to improve the alignment of our executive compensation programs with the interests of the Company and our stockholders.
Section 14A of the Exchange Act and related SEC rules require that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. We must provide this opportunity to our stockholders at least once every three years; however, following the recommendation of our stockholders, our Board has chosen to hold this vote every year.
In deciding how to vote on this proposal, the Board encourages you to read the Executive Compensation section of this proxy statement. The Board recommends that stockholders vote “FOR” approval of the following circumstances, ifresolution:
“RESOLVED, that the
company fails to cure such circumstances within 30 days after receipt of written notice fromCompany’s stockholders hereby approve, on an advisory basis, the
participant setting forth a description of such good reason: (a) the removal from or failure to re-elect the named executive officer to the office or position in which he or she last served;
(b) the assignment to the named executive officer of any duties, responsibilities, or reporting requirements materially inconsistent with his or her position with the company or any material diminishment, on a cumulative basis,compensation of the named executive officer's overall duties, responsibilitiesofficers of Ashford Hospitality Trust, Inc. as disclosed in the Company’s proxy statement for the 2023 annual meeting of stockholders, in accordance with the SEC’s compensation disclosure rules.”
Because your vote is advisory in nature, it will not have any effect on compensation already paid or
status; (c)awarded to any of our executive officers and will not be binding on our Board. However, the Compensation Committee will take into account the outcome of this advisory vote when considering future executive compensation decisions.
The Board unanimously recommends a material reductionvote FOR approval of Proposal Number Two, advisory approval of our executive compensation.
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PROPOSAL NUMBER THREE-ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION At our 2017 Annual Meeting, stockholders voted in favor of holding an advisory vote on executive compensation (commonly referred to as a “say-on-pay” vote) every year. Since that time, we have included a say-on-pay vote in our proxy statement each year. Pursuant to Section 14A of the Exchange Act, as amended by the companyDodd-Frank Act, companies are required to ask stockholders at least once every six years how often they would like the Company to hold such a vote. Thus, this year we are again asking you to vote on how often we should hold say-on-pay votes.
Our Board believes that, of the three alternative frequencies, submitting a non-binding, advisory say-on-pay resolution to stockholders every year is preferable. Annual votes will provide the Board with clearer feedback regarding the compensation of our named executive officers. The primary focus of the disclosure of the compensation of our named executive officers required to be included in our proxy statements is compensation granted in or for the prior fiscal year. Additionally, the compensation committee re-evaluates the compensation of our named executive officers each year. An annual say-on-pay resolution will match the annual focus of this proxy statement disclosure and provide us with the clearest and most timely feedback of the three options. This feedback may then be considered by our Compensation Committee in its next annual decision-making process. Additionally, the administrative process of submitting a non-binding, advisory say-on-pay resolution to stockholders on an annual basis is not expected to impose any substantial additional costs on the Company.
Please mark on the proxy card your preferred frequency by choosing the option of every year, two years or three years or mark “abstain” when you indicate your preference in response to the resolution set forth below.
“RESOLVED, that the Company’s stockholders hereby approve, on a non-binding, advisory basis, the submission by the Company of a non-binding, advisory say-on-pay resolution pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, every year, every two years, or every three years.”
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years or abstain from voting. The option of one year, two years or three years that receives a majority of votes cast by stockholders will be considered the frequency for the advisory vote on executive compensation that has been selected by stockholders. In the event that no option receives a majority of the votes cast, we will consider the option that receives the most votes to be the option selected by the stockholders. However, because this vote is advisory and not binding on the Board or the Company in any way, the Board may decide that it is in the namedbest interests of the Company to hold an advisory vote on executive officer's fees, compensation more or benefits;less frequently than the option approved by our stockholders.
The Board unanimously recommends that stockholders vote to hold an advisory vote on executive compensation EVERY YEAR.
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PROPOSAL NUMBER FOUR-RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS OUR INDEPENDENT AUDITORS We are asking our stockholders to ratify our Audit Committee’s appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. BDO USA, LLP has served as the Company’s auditor since 2015. Stockholder ratification of the selection of BDO USA, LLP as our independent registered public accounting firm is not required by our bylaws or
(d) otherwise. However, our Board is submitting the requirementselection of BDO USA, LLP to our stockholders for ratification as a matter of good corporate governance practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders.
Our Audit Committee is responsible for appointing, retaining, setting the compensation of, and overseeing the work of our independent registered public accounting firm. Our Audit Committee pre-approves all audit and non-audit services provided to us by our independent registered public accounting firm. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. The Audit Committee has delegated pre-approval authority to its chairperson when expedition of services is necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the company thatindependent registered public accounting firm in accordance with this pre-approval, and the principal place of business at whichfees for the participant performs his or her duties be changedservices performed to a location more than 50 miles from downtown Dallas, Texas.date. The Audit Committee approved all fees paid to BDO USA, LLP since their appointment with no reliance placed on the de minimis exception established by the SEC for approving such services.
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AUDIT COMMITTEE
Audit Committee Report
Our
audit committeeAudit Committee is governed by a written charter adopted by our
board of directorsBoard and is composed of three independent directors, each of whom has been determined by our
board of directorsBoard to be independent in accordance with the rules of the NYSE.
The following is our
audit committee'sAudit Committee’s report in its role as the overseer of the integrity of our financial statements, the financial reporting process, our independent
auditor'sauditor’s performance, including their qualification and independence, and our compliance with legal and regulatory requirements. In carrying out its oversight responsibilities, our
audit committeeAudit Committee is not providing any expert or special assurance as to our financial statements or any professional certification as to the outside
auditor'sauditor’s work. This report shall not be deemed to be soliciting material or to be filed with the SEC under the Securities Act of 1933, as amended, or the Exchange Act or incorporated by reference in any document so filed.
AUDIT COMMITTEE REPORT
The
audit committeeAudit Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. The
audit committeeAudit Committee meetings include, whenever appropriate, executive sessions with the independent auditors and with
Ashford'sthe Company’s internal auditors, in each case without the presence of management.
The
audit committeeAudit Committee has reviewed and discussed the consolidated financial statements
of the Company as of and for the year ended December 31, 2022 with management
of the Company and BDO USA, LLP,
Ashford'sthe Company’s independent registered public accounting firm. Management is responsible for the preparation, presentation and integrity of
Ashford'sthe Company’s consolidated financial
statements;statements; accounting and financial reporting
principles;principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e))
;; establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f))
;; evaluating the effectiveness of
the Company’s disclosure controls and
procedures;procedures; evaluating the effectiveness of
the Company’s internal control over financial
reporting;reporting; and evaluating any change in internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. BDO USA, LLP is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
During
Management, with the courseinvolvement of our Chief Executive Officer and Chief Financial Officer, has completed an evaluation of the year, management completed the documentation, testing and evaluation of Ashford'sCompany’s system of internal control over financial reporting as of December 31, 2022 in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The audit committee was kept apprisedUpon completion of the progress of the that
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evaluation, and provided oversight and advice to management during the process. In connection with this oversight, the audit committee received periodic updates provided by management and Ernst & Young, LLP, until their resignation effective upon the filing of our third quarter 10-Q in October 2015, and BDO USA, LLP, from and after their appointment as our lead auditor, at each regularly scheduled audit committee meeting. At the conclusion of the process, management provided the audit committeeAudit Committee with, and the audit committeeAudit Committee reviewed, a written report on the effectiveness of Ashford'sour internal control over financial reporting.reporting provided by management. The audit committeeAudit Committee also reviewed the report of management contained in Ashford's annual reportthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20152021 filed with the SEC, as well as BDO USA, LLP'sLLP’s Report of Independent Registered Public Accounting Firm included in Ashford's annual reportthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20152021 related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The audit committeeAudit Committee continues to oversee Ashford'sour efforts related to its internal control over financial reporting and management'smanagement’s preparation for the evaluation in fiscal year 2015.2022.
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The audit committeeAudit Committee has discussed with BDO USA, LLP the matters required to be discussed with the independent auditors pursuant to Statement onPublic Company Accounting Oversight Board Auditing StandardsStandard No. 61, as amended1301 (Communication with the Audit Committees), including the quality of Ashford'sour accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The audit committeeAudit Committee has received the written disclosures and letter from BDO USA, LLP to the audit committeeAudit Committee required by the applicable requirements of the Public Company Accounting Oversight Board regarding BDO USA, LLP'sLLP’s communications with the audit committeeAudit Committee concerning independence, and has discussed with BDO USA, LLP its independence.
Taking all of these reviews and discussions into account, the undersigned audit committeeAudit Committee members recommended to the board of directorsBoard that the boardBoard approve the inclusion of Ashford'sour audited financial statements in Ashford'sour Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2022, for filing with the SecuritiesSEC.
| | | | AUDIT COMMITTEE | |
| | | | Sheri L. Pantermuehl, Chair | |
| | | | Frederick J. Kleisner | |
| | | | Alan L. Tallis | |
Services provided by BDO USA, LLP included the audits of the annual consolidated financial statements of the Company and Exchange Commission.our subsidiaries. Services also included the review of unaudited quarterly consolidated financial information in accordance with PCAOB standards, review and consultation regarding filings with the SEC and the Internal Revenue Service, and consultation on financial and tax accounting and reporting matters. During the years ended December 31, 2022 and 2021, aggregate fees incurred related to our principal accountants, BDO USA, LLP consisted of the following:
| Audit Fees | | | $1,360,400 | | | $1,128,455 | |
| Audit-Related Fees | | | $— | | | $— | |
| Tax Fees | | | $— | | | $— | |
| All Other Fees | | | $— | | | $— | |
| Total | | | $1,360,400 | | | $1,128,455 | |
“Audit Fees” include fees and related expenses for professional services rendered in connection with audits of our annual financial statements and the financial statements of certain of our subsidiaries, reviews of our unaudited quarterly financial information, reporting on the effectiveness of our internal controls over financial reporting and reviews and consultation regarding financial accounting and reporting matters. This category also includes fees for services that generally only the auditor reasonably can provide, such as statutory audits, comfort letters, consents, and assistance with review of our filings with the SEC. “Audit-Related Fees” include fees and related expenses for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not Audit Fees.
“Tax Fees” include fees and related expenses billed for tax compliance services and federal and state tax advice and planning.
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“All Other Fees” include fees and related expenses for products and services that are not Audit Fees, Audit-Related Fees or Tax Fees.
Representatives of BDO USA, LLP will be present at the annual meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
The Board unanimously recommends a vote FOR approval of Proposal Number Four, the ratification of the appointment of BDO USA, LLP as our independent auditors for the fiscal year ending December 31, 2023.
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Amish Gupta
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TablePROPOSAL NUMBER FIVE-APPROVAL OF AMENDMENT NO. 3 TO THE ASHFORD HOSPITALITY TRUST, INC. 2021 STOCK INCENTIVE PLANIn 2021, the Company adopted its 2021 Stock Incentive Plan (as amended, the “2021 Plan”) and subsequently amended it in 2021 to memorialize the Company’s 1-for-10 reverse stock split and in 2022 to increase the number of
Contentsshares available for issuance, which increase was approved by the Company’s stockholders at last year’s annual meeting. The Board now proposes and recommends that stockholders approve Amendment No. 3 to the 2021 Plan to further increase the number of shares available for issuance (the “Plan Amendment” and, together with the earlier amendments, collectively the “Plan Amendments”).
The 2021 Plan is our primary retention tool, the purpose of which is to encourage those who provide services to the Company (including, without limitation, our executive officers, non-employee directors, employees of our advisor, and others providing advisory or consulting services to the Company) to acquire or increase their equity interests in our Company to give an added incentive to work toward its growth and success. In 2022, the 2021 Plan was amended to increase the aggregate number of shares of common stock available under the 2021 Plan from 530,000 shares to 1,180,000 shares (an increase of 650,000 shares).
As of December 31, 2022, there were (i) 86,271 shares of the Company’s common stock available for issuance under the 2021 Plan, (ii) 818,302 shares subject to outstanding “full-value” awards under the 2021 Plan (e.g., restricted stock, performance stock units, and time- and performance-based LTIPs, which figure includes 662,793 performance awards at the “target” level, and which may ultimately vest between 0% and 250% of target), and (iii) 0 shares subject to outstanding options and stock appreciation rights under the 2021 Plan.
The purpose of the Plan Amendment is to increase the aggregate number of shares of our common stock available for issuance under the 2021 Plan from 1,180,000 shares to 2,140,000 shares (an increase of 960,000 shares). All of the newly available shares would be available for the grant of incentive stock options.
The Board believes that increasing the reserved shares of the Company’s common stock available for issuance under the 2021 Plan by 960,000 shares would provide sufficient shares for the Company’s equity-based compensation needs for approximately one to two years following stockholder approval of the Plan Amendment. This estimate is based on our historical usage. The reserve may be sufficient for a longer or shorter period of time, depending on our future equity grant needs, which are related to factors such as our participant population, future award forfeitures and cancellations, the Company’s acquisition activity, the Company’s stock price, and our retentive needs in a competitive compensation environment.
As described in detail in the “Executive Compensation” section of this proxy statement, equity compensation is integral to our operations. Our executive officers, as with the other employees of our advisor, are eligible to receive equity awards from us, which provide them with long-term exposure to our performance and aligns their interests with those of our stockholders. If our stockholders do not approve the Plan Amendment, our future ability to issue appropriate equity compensation to hire and retain talent will be severely limited, which could have an adverse impact on our ability to retain our workforce and, ultimately, on our business.
We are asking stockholders to approve the Plan Amendment. A summary of the material terms of the 2021 Plan, as amended by the Plan Amendments, is set forth below. Our summaries of the Plan Amendment and the 2021 Plan (as amended by the Plan Amendments) are qualified in their entirety by reference to the full text of the 2021 Plan, which, as previously amended and as it would be amended by the Plan Amendment, is provided in Annex B to this proxy statement.
The potential dilution resulting from issuing all of the 960,000 additional shares of the Company’s common stock available for issuance under the 2021 Plan as amended by the Plan Amendment, if approved, would be 2.8%, based on our common stock outstanding as of March 10, 2023 (approximately 34,495,124 shares, exclusive of 304,493 outstanding units in our operating partnership). The Company’s burn rate over 2020-2022 under the 2021 Plan was 2.55%, 2.03% and 0.38%, respectively, for a three-year average burn rate of 1.65%.
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The following chart shows the status of performance-based compensation awards in respect of years 2022-2022:
| Non-Vested at Dec. 31, 2019 | | | 15,842 | | | 9,876 | | | 19,751 | |
| Granted | | | 7,000 | | | 2,500 | | | 5,000 | |
| Vested or Earned | | | - | | | - | | | - | |
| Forfeited | | | 10,089 | | | 5,894 | | | 11,787 | |
| Non-Vested at Dec. 31, 2020 | | | 12,753 | | | 6,482 | | | 12,964 | |
| Granted | | | 134,363 | | | 48,860 | | | 122,149 | |
| Vested or Earned | | | - | | | - | | | - | |
| Forfeited | | | 8,003 | | | 3,982 | | | 7,964 | |
| Non-Vested at Dec. 31, 2021 | | | 139,113 | | | 51,360 | | | 127,149 | |
| Granted | | | 34,361 | | | 478,189 | | | 1,195,473 | |
| Vested or Earned | | | 32,980 | | | 1,500 | | | 1,500 | |
| Forfeited | | | 4,750 | | | 1,000 | | | 3,500 | |
| Non-Vested at Dec. 31, 2022 | | | 135,744 | | | 527,049 | | | 1,317,622 | |
SUMMARY OF THE 2021 PLAN, AS AMENDED BY THE PLAN AMENDMENTS Eligibility
Under the 2021 Plan, we may grant awards to employees, consultants and non-employee directors of the Company or its affiliates (including, without limitation, the Company’s advisor, Ashford Inc., and its subsidiaries). While we may grant incentive stock options only to employees of the Company or certain of its affiliates, we may grant nonqualified stock options and other types of awards to any eligible participant. As of December 31, 2022, we had seven non-employee directors and we and our affiliates had a total of approximately 534 employees who are reasonably expected to be eligible for receipt of an award under the 2021 Plan.
Types of Awards
The 2021 Plan authorizes the Company to grant:
nonqualified stock options;
incentive stock options;
unrestricted (or “bonus”) stock;
restricted stock;
phantom stock;
stock appreciation rights; and
• | other stock-based awards, including long-term incentive partnership units in our operating partnership (“LTIP units”) and cash denominated awards. |
In addition, the 2021 Plan permits the Company to sell shares of common stock to a participant (for no more than their fair market value at the time of purchase).
Shares Subject to the 2021 Plan
If the Plan Amendment is approved by our stockholders, the aggregate number of shares of our common stock available for issuance under the 2021 Plan would increase from 1,180,000 shares to 2,140,000 shares (the “Share Limit”), an increase of 960,000 shares. As of March 21, 2023, the closing per share trading value of our common stock was $3.04.
These shares may be shares of original issuance, treasury shares, shares acquired in the open market or a combination of the foregoing. Shares of our common stock issued under any plan assumed by the Company in any corporate transaction will not count against the Share Limit, nor will any awards granted in substitution for outstanding
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awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines. Any shares subject to an award under the 2021 Plan that is forfeited or expires or is settled for cash shall, to the extent of such forfeiture, expiration or cash settlement, again become available for awards under the 2021 Plan, except that the following shares shall not again become available for awards under the 2021 Plan: (i) shares tendered by a participant or withheld by the Company in payment of the purchase price of an option issued under the 2021 Plan, (ii) shares tendered by a participant or withheld by the Company to satisfy any tax withholding obligation with respect to an award under the 2021 Plan, (iii) shares repurchased by the Company with proceeds received from the exercise of an option issued under the 2021 Plan, and (iv) shares subject to a stock appreciation right issued under the 2021 Plan that are not issued in connection with the stock settlement of that stock appreciation right upon its exercise.
Administration
The 2021 Plan is administered by the Compensation Committee of our Board (the “Compensation Committee”). The authority of the Compensation Committee includes, among other things, selecting award recipients, establishing award terms and conditions, granting awards, construing any ambiguous provision of the 2021 Plan or in any award agreement issued thereunder, and adopting modifications and amendments to the 2021 Plan or any award agreement, subject to the terms of the 2021 Plan. The Board may also exercise the full power to administer the 2021 Plan in its discretion.
Types of Awards
Stock Options. Stock options entitle the participant to purchase shares of our common stock at a price not less than the fair market value per share on the grant date. Stock options may be incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options. All of the shares available for issuance under the 2021 Plan, including those subject to the Plan Amendment if approved, may be granted in the form of incentive stock options. The Compensation Committee may establish procedures through which the exercise price is payable in cash or by check, by a cashless broker-assisted exercise, by the transfer to the Company of shares of our common stock owned by the participant, by the Company withholding shares of our common stock otherwise deliverable to the participant upon the exercise of the stock option, or by a combination of these payment methods. No stock option will be exercisable more than 10 years after the grant date. Except as otherwise provided in an applicable award agreement, outstanding unvested options will vest if we terminate a participant’s service without “cause,” a participant terminates his or her service with us for “good reason,” or a participant’s employment ends due to death or disability. Stock options are generally not transferable other than by will or the laws of descent and distribution or pursuant to a domestic relations order. We have not granted any stock options under the 2021 Plan.
Restricted Stock. A grant of restricted stock constitutes an immediate transfer to the participant of the ownership of shares of our common stock. Restricted stock generally entitles the holder to voting and dividend rights. While restricted stock remains unvested, the transferability of the restricted stock may be prohibited or restricted in the manner and to the extent prescribed by the Compensation Committee on the grant date. Except as otherwise provided in an applicable award agreement, outstanding unvested shares of restricted stock will vest if we terminate a participant’s service without “cause,” a participant terminates his or her service with us for “good reason,” or a participant’s employment ends due to death or disability.
Bonus Stock. Bonus stock is a share of common stock not subject to any vesting or forfeiture restrictions.
Phantom Stock. Phantom stock is a right, subject to satisfaction of terms and conditions as imposed by the Compensation Committee, to receive, upon vesting, cash, common stock, other securities, or other property equal to the value of a stated number of shares of common stock. The right to receive payment of an award of phantom stock may be conditioned upon continued employment or achievement of performance goals.
Stock Appreciation Rights. A stock appreciation right is a right to receive from the Company an amount equal to the fair market value of the underlying share on the date of exercise less the grant price (or strike price) of the stock appreciation right. The amount payable by the Company upon the exercise of a stock appreciation right may be paid in cash, shares of our common stock, other property or any combination thereof.
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Stock appreciation rights can be tandem (i.e., granted with stock options to provide an alternative to the exercise of the option rights) or freestanding. Tandem appreciation rights may only be exercised at a time when the related option right is exercisable, and require that the related stock option be surrendered for cancellation. No stock appreciation right will be exercisable more than 10 years after the grant date.
Other Stock-Based Awards. Consistent with the terms of the 2021 Plan, the Compensation Committee will establish the terms of awards of other stock-based awards, including restricted stock units or LTIP units, and such other awards may also be denominated and/or payable in cash. These awards may also be subject to vesting requirements as determined by the Compensation Committee, which may include completion of a period of service or attainment of performance objectives.
The LTIP units are a special class of partnership units in our operating partnership. Grants of LTIP units are designed to offer participants the same long-term incentive as restricted stock, while allowing them more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under the 2021 Plan, reducing availability for other equity awards, because LTIP units are convertible into common units of our operating partnership, which may themselves be converted into shares of our common stock based on a conversion ratio of 1:1. As a result, an LTIP unit granted may result in an issuance of one share of our common stock. LTIP units, whether vested or not, receive the same quarterly per unit distributions as common units of our operating partnership, which typically equal per share dividends on our common stock, if any. This treatment with respect to quarterly distributions is analogous to the treatment of time-vested restricted stock. (Note that distributions on LTIPs that vest subject to achievement of performance goals accrue on unvested units and are paid in the form of additional common units of our operating partnership on the actual number of LTIP units that vest.) The key difference between LTIP units and restricted stock is that at the time of award, LTIP units do not have full economic parity with common units but can achieve such parity over time. Upon the occurrence of certain corporate events, which are not performance-related events, the capital accounts of our operating partnership may be adjusted, allowing for the LTIP units to achieve parity with the common units over time. If such parity is reached, vested LTIP units become convertible into an equal number of common units. Until and unless such parity is reached, the value that a participant will realize for a given number of vested LTIP units is less than the value of an equal number of shares of our common stock.
Subject to satisfaction of the applicable performance- or service-vesting requirements for the LTIP units, the LTIP units will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of the partnership at a time when the Company’s stock is trading at some level in excess of the price it was trading at on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for the operating partnership. A capital account revaluation generally occurs whenever there is an issuance of additional partnership interests or the redemption of a partnership interest. If a sale, or deemed sale as a result of a capital account revaluation, occurs at a time when the operating partnership’s assets have sufficiently appreciated, the LTIP units will achieve full economic parity with the common units. However, in the absence of sufficient appreciation in the value of the assets of the operating partnership at the time a sale or deemed sale occurs, full economic parity would not be reached.
Adjustments
In the event of (i) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of common stock or other securities of the Company, issuance of warrants or other rights to acquire shares of common stock or other securities of the Company or other similar corporate transaction or event that affects the shares of common stock, or (ii) unusual or nonrecurring events affecting the Company, including changes in applicable rules, rulings, regulations or other requirements, that the Compensation Committee determines, in its sole discretion, could result in dilution or enlargement of the rights intended to be granted to, or available for, participants (any event in (i) or (ii), an “Adjustment Event”), the Compensation Committee shall, in respect of any such Adjustment Event, make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of: (A) the Share Limit, or any other limit applicable under the 2021 Plan with respect to the number of awards which may be granted thereunder; (B) the number of shares of common stock or other securities of the Company (or number and kind of other securities or other property) which may be issued in respect of awards or with respect to which awards may be granted under the 2021 Plan; and (C) the terms of any outstanding award, including, without limitation, (I) the number of shares of
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common stock or other securities of the Company (or number and kind of other securities or other property) subject to outstanding awards or to which outstanding awards relate; (II) the exercise price or strike price with respect to any award; or (III) any applicable performance measures; provided, that in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto)), the Compensation Committee shall make an equitable or proportionate adjustment to outstanding awards to reflect such equity restructuring. Any adjustment may provide for the elimination of any fractional share that might otherwise become subject to an award. Any adjustment by the Compensation Committee shall be conclusive and binding for all purposes.
Dividends and Dividend Equivalents
The Compensation Committee may, in its sole discretion, provide a participant as part of an award with dividends, dividend equivalents, or similar payments in respect of awards, payable in cash, shares of common stock, other securities, other awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Compensation Committee in its sole discretion.
Clawback
All awards under the 2021 Plan shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Compensation Committee and as in effect from time to time; and (ii) applicable law. Further, unless otherwise determined by the Compensation Committee, to the extent that the participant receives any amount in excess of the amount that the participant should otherwise have received under the terms of the award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations, or other administrative error), the participant may be required by the Compensation Committee to repay any such excess amount to the Company.
Transferability
Awards under the 2021 Plan are generally not transferable. However, the Compensation Committee may approve transfers to certain family members of a participant, a trust solely for the benefit of a participant and the participant’s family members, a partnership or limited liability company whose only partners or stockholders are the participant and the participant’s family members, or a beneficiary to whom donations are eligible to be treated as “charitable contributions.”
Prohibition on Repricing
The Compensation Committee does not have the right, without stockholder approval, to (i) grant to holders of outstanding options or stock appreciation rights, in exchange for the surrender and cancellation of such options or stock appreciation rights, (x) new options or stock appreciation rights having exercise or grant prices lower than the exercise or grant price provided in the options or stock appreciation rights so surrendered and canceled, or (y) another award or cash payment with a value that is greater than the intrinsic value (if any) of the canceled option or stock appreciation right, or (ii) take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or quoted.
Amendment; Duration; Termination
The Board may amend or terminate the 2021 Plan at any time, but an amendment will not become effective without the approval of our stockholders if it increases the number of shares of common stock that may be issued under the plan (other than changes permitted in connection with an Adjustment Event) or otherwise “materially revises” the terms of the 2021 Plan (within the meaning of the applicable NYSE rules). No amendment or termination of the 2021 Plan will adversely affect a participant’s rights under outstanding awards in any material respect without the participant’s consent. If not sooner terminated as described above, the 2021 Plan will terminate on May 12, 2031, and no new awards may be granted under the 2021 Plan after the termination date. Awards made before the 2021 Plan’s termination will continue in accordance with their terms.
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Material U.S. Federal Income Tax Consequences Related to Awards Granted under the 2021 Plan
The following is a brief summary of certain material U.S. federal income tax consequences related to awards under the 2021 Plan. This summary is not intended to be complete and does not purport to cover federal employment tax or other federal tax consequences, or any state, local, or non-U.S. taxes.
Tax Consequences to Participants
Incentive Stock Options. No income generally will be recognized by a participant upon the grant or exercise of an incentive stock option. The exercise of an incentive stock option, however, may result in alternative minimum tax liability. If shares of our common stock are issued to the participant pursuant to the exercise of an incentive stock option, and if no disqualifying disposition of such shares is made by such participant within two years after the date of grant or within one year after the transfer of such shares to the participant, then upon sale of such shares, any amount realized in excess of the exercise price will be taxed to the participant as a long-term capital gain and any loss sustained will be a long-term capital loss.
If shares of our common stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either holding period described above, the participant generally will recognize ordinary income in the year of disposition in an amount equal to the excess, if any, of the market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the exercise price. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
Nonqualified Stock Options. In general, no income will be recognized by a participant at the time a nonqualified stock option is granted. Upon exercise of a nonqualified stock option, ordinary income will be recognized by the participant in an amount equal to the difference between the exercise price and the market value of the shares, if unrestricted, on the date of exercise. At the time of sale of shares acquired pursuant to the exercise of a nonqualified stock option, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.
Stock Appreciation Rights. No income will be recognized by a participant in connection with the grant of a stock appreciation right. When the stock appreciation right is exercised, the participant generally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the market value of any unrestricted shares of our common stock (or other securities or property) received on the exercise.
Restricted Stock. The recipient of restricted stock generally will be subject to tax at ordinary income rates on the market value of the restricted stock (reduced by any amount paid by the participant for such restricted stock) at such time as the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code. However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of grant of the shares will have taxable ordinary income on the date of grant of the shares equal to the excess of the market value of such shares (determined without regard to any such restrictions) over the purchase price, if any, of such restricted stock.
Other Stock-Based Awards. The tax consequences of another stock-based award will depend on the structure and terms of such award. Generally, LTIP units are intended to be treated as “profits interests” for purposes of the Code, meaning that a participant will generally not recognize income on the date of grant or vesting of an LTIP unit, and may benefit from taxation at long-term capital gains rates upon disposition of the LTIP unit if applicable holding period requirements are satisfied.
Tax Consequences to the Company
To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will generally be entitled to a corresponding deduction, subject to applicable limitations under the Code (including Section 162(m) of the Code). The Company is not entitled to a corresponding deduction where a participant recognizes capital gain (or loss) in the circumstances described above.
Section 409A of the Code
Certain types of awards under the 2021 Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of
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the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the 2021 Plan and awards granted under the 2021 Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance that may be issued under Section 409A of the Code. To the extent determined necessary or appropriate by the Compensation Committee, the 2021 Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section 409A of the Code.
New Plan Benefits
Because benefits under the 2021 Plan are at the discretion of the Compensation Committee, it is not possible to determine the value of benefits that will be received by participants in the 2021 Plan with respect to any awards made in the future.
Equity Compensation Plan Information
The following table sets forth certain information with respect to securities authorized and available for issuance under our equity compensation plans as of December 31, 2022:
| Equity compensation plans approved by security holders | | | 210,905 | | | N/A | | | 86,271 | |
| Equity compensation plans not approved by security holders | | | None | | | N/A | | | None | |
| Total | | | 210,905 | | | N/A | | | 86,271 | |
(1)
| Consists of rights to acquire our common stock subject to the satisfaction of service and or performance vesting conditions (with the amount shown assuming the maximum level of performance under the 2021 and 2022 PSU awards). The number of shares subject to issuance under the PSUs (if any) will depend on the ultimate actual performance level, and the Company in its discretion may settle the 2022 PSUs in cash rather than shares of common stock. |
(2)
| As of December 31, 2022, there were 86,271 shares of our common stock, or securities convertible into 86,271 shares of our common stock that remained available for issuance under our 2021 Stock Incentive Plan. |
Vote Required for Approval
Approval of the Plan Amendment requires the affirmative vote of a majority of the votes cast. Abstentions will not be treated as a vote cast either “for” or “against” the approval of the Plan Amendment, and therefore will not be included in the vote totals and will not affect the outcome of the vote for the Plan Amendment. Assuming a valid quorum is otherwise established, broker non-votes will have no effect on the outcome of any vote on the proposal to approve the Plan Amendment.
Recommendation of the Board
The Board unanimously recommends a vote FOR the approval of the Plan Amendment. The Board believes it is in the best interests of the Company and its stockholders to enable the Company to implement equity incentive compensation arrangements that are able to appropriately incentivize and retain our executive officers and non-employee directors, employees of our advisor, and others providing advisory or consulting services to the Company, and align the interests of participants with the interests of our stockholders. If our stockholders do not approve the Plan Amendment, our future ability to issue appropriate equity compensation to hire and retain talent will be severely limited, which could have an adverse impact on our ability to retain our workforce and, ultimately, on our business.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL NUMBER FIVE, APPROVAL OF AMENDMENT NO. 3 TO THE ASHFORD HOSPITALITY TRUST, INC. 2021 STOCK INCENTIVE PLAN.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
For purposes
The following table sets forth information as of
this proxy statement a "beneficial owner" means anyMarch 10, 2023 regarding the ownership of our equity securities by (i) each person
known to us who
beneficially owns, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power which includes the power to vote, or to direct the voting of, any classmore than five percent of our outstanding shares of voting securities; and/or
stock, (ii) investment power which includes the power to dispose, or to direct the disposition of, any class of our voting securities.
Security Ownership of Management
Listed in the following table and the notes thereto is certain information with respect to the beneficial ownership of our common stock as of April 14, 2016, by (i) each of our directors (ii) each ofand our named executive officers and (iii) all of our directors and executive officers as a group. Voting powerIn accordance with SEC rules, each listed person’s beneficial ownership includes: (i) all shares the person owns beneficially; (ii) all shares over which the person has or shares voting or dispositive control; and (iii) all shares the person has the right to acquire within 60 days. Unless otherwise indicated, each person or entity named below has sole voting and investment power in common stock are exercisable solely by the named person. Although Mr. Archie Bennett is no longer a director or executive officer, we continuewith respect to include him in this table because of his chairman emeritus status and his relationship to Mr. Monty Bennett.
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Name of Stockholder | | Number of Shares Beneficially Owned(1) | | Percent of Class(2) | |
---|
Monty J. Bennett | | | 6,693,615 | (3) | | 6.6 | % |
Archie Bennett, Jr. | | | 5,189,942 | | | 5.4 | % |
Benjamin J. Ansell, M.D. | | | 185,918 | | | * | |
Thomas E. Callahan | | | 80,084 | | | * | |
Amish Gupta | | | 18,179 | | | * | |
Kamal Jafarnia | | | 26,240 | | | * | |
Philip S. Payne | | | 67,259 | | | * | |
Alan L. Tallis | | | 268,186 | | | * | |
David A. Brooks | | | 2,137,968 | | | 2.2 | % |
Deric S. Eubanks | | | 348,515 | | | * | |
Douglas A. Kessler | | | 1,696,568 | | | 1.8 | % |
Jeremy Welter | | | 358,574 | | | * | |
| | | | | | | |
All executive officers and directors as a group (14 persons) | | | 18,434,950 | | | 16.9 | % |
*Denotes less than 1.0%.
(1)Assumes that all common unitsshares of our operating partnership heldvoting stock shown to be beneficially owned by such person or groupentity. As of persons are redeemed for commonMarch 10, 2023, we had an aggregate of 34,495,123 shares of voting stock based on the applicable exchange ratio asoutstanding, consisting of April 14, 2016, which was approximately 0.950234,495,123 shares of our common stock per common unit, and includes all restricted stock grants made since our initial public offering through April 14, 2016. All such stock grants typically vest over a period of time generally commencing onstock. Except as indicated in the date of their issuance. The number includes LTIP units in our operating partnership that have achieved economic parity with the common units as of the record date but excludes any LTIP units (including performance LTIPs) issued subsequentfootnotes to the record date or that have not yet achieved economic parity or PSUs or LTIPs or performance LTIPs that have not yet vested. All LTIP units that have achieved economic parity withtable below, the common units are, subject to certain time-based vesting requirements, convertible into common units, which are redeemable for cash or, at our option, convertible into sharesaddress of each person listed below is the address of our common stock.
principal executive office, 14185 Dallas Parkway, Suite 1200, Dallas, Texas 75254.Security Ownership of Management and Directors | Monty J. Bennett | | | 97,204(3) | | | * | |
| Benjamin J. Ansell, M.D. | | | 53,477 | | | * | |
| Amish Gupta | | | 24,795 | | | * | |
| Kamal Jafarnia | | | 23,987 | | | * | |
| Frederick J. Kleisner | | | 23,462 | | | * | |
| Sheri L. Pantermuehl | | | 23,653 | | | * | |
| Alan L. Tallis | | | 28,552 | | | * | |
| Deric S. Eubanks | | | 26,033 | | | * | |
| Mark L. Nunneley | | | 16,359 | | | * | |
| J. Robison Hays, III | | | 107,519 | | | * | |
| Alex Rose | | | — | | | * | |
| All executive officers and directors as a group (11 persons) | | | 425,040 | | | 1.2% | |
(1)
| Assumes that all common units of our operating partnership held by such person or group of persons are redeemed for common stock based on the applicable exchange ratio as of March 10, 2023, which was one share of our common stock per common unit, and includes all restricted stock grants made since our initial public offering through March 10, 2023. All such stock grants typically vest over a period of time generally commencing on the date of their issuance. The number includes LTIP units in our operating partnership that have achieved economic parity with the common units as of March 10, 2023 but excludes any LTIP units (including Performance LTIPs) issued subsequent to March 10, 2023 or that have not yet achieved economic parity or PSUs, LTIP units or Performance LTIPs that have not yet vested. All LTIP units that have achieved economic parity with the common units are, subject to certain time-based and/or performance-based vesting requirements, convertible into common units, which may be redeemed for either cash or, at our sole discretion, up to one share of our common stock. |
(2)
| As of March 10, 2023, there were outstanding and entitled to vote 34,495,123 shares of common stock. The total number of shares outstanding used in calculating the percentage for each person assumes that operating partnership common units held by such person and LTIP units held by such person that have achieved economic parity with the common units are redeemed for common stock, using the conversion ratio effective as of the record date, but none of the operating partnership units held by other persons are redeemed for common stock. |
(3)
| Includes 9,431 common units held directly by Ashford Financial Corporation, 50% of which is owned by Mr. Monty J. Bennett. Mr. Monty J. Bennett disclaims beneficial ownership in excess of his pecuniary interest in such common units. |
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(2)As of the April 14, 2016 record date, there were outstanding and entitled to vote 95,686,992 shares of common stock. The total number of shares outstanding used in calculating the percentage for each person assumes that operating partnership common units held by such person and LTIP units held by such person that have achieved economic parity with the common units are redeemed for common stock, using the conversion ratio effective as of the record date, but none of the operating partnership units held by other persons are redeemed for common stock.
(3)Includes 1,025,000 common units held directly by Ashford Financial Corporation, 50% of which is owned by Mr. Monty Bennett. Mr. Monty Bennett disclaims beneficial ownership in excess of his pecuniary interest in such common units.
Security Ownership of Certain Beneficial Owners
Listed in the
The following table andsets forth information as of March 10, 2023 regarding the notes thereto is certain information with respect to the beneficial ownership of our common stock as of April 14, 2016equity securities by the persons known to Ashford Trust to be the beneficial owners of five percent or more of our common stock (our only voting securities), by virtue of the filing of a Schedule 13D or Schedule 13G with the Securities and Exchange Commission.SEC. To our knowledge, other than as set forth in the table below, there are no persons owning more than five percent of any class of Ashford'sAshford Trust’s common stock. Unless otherwise indicated, all shares are owned directly and the indicated person has sole voting and investment power.
| Common Stock | | | Brookfield Asset Management Inc. | | | 1,810,890 (2) | | | 5.3% | |
| Common Stock | | | BlackRock, Inc. | | | 2,548,589 (3) | | | 7.4% | |
| Common Stock | | | Värde Partners, L.P. | | | 2,434,064 (4) | | | 7.19% | |
(1)
| As of March 10, 2023, there were outstanding and entitled to vote 34,495,123 shares of common stock. |
(2)
| Based on information provided by Brookfield Asset Management Inc. in a Schedule 13G filed with the SEC on February 14, 2022. Per such Schedule 13G, Brookfield Asset Management Inc. has sole voting power over all of such shares and sole dispositive power of all of such shares. The principal business address of Brookfield Asset Management Inc. is 333 S. Grand Avenue, 28th Floor, Los Angeles, CA 90071. |
(3)
| Based on information provided by BlackRock, Inc. in a Schedule 13G filed with the SEC on February 3, 2023. Per such Schedule 13G, BlackRock, Inc. has sole voting power over 2,472,225 and sole dispositive power of all of such shares. The principal business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(4)
| Based on information provided by Värde Partners, L.P. in a Schedule 13G filed with the SEC on February 14, 2022. Per such Schedule 13G, Värde Partners, L.P. has shared voting power over all of such shares and shared dispositive power of all of such shares. The principal business address of Värde Partners, L.P. is 901 Marquette Ave S, Suite 3300, Minneapolis, MN 55402. |
Delinquent Section 16(a) Reports
Based solely on a review of the reports furnished to the Company, or written representations from reporting persons that all reportable transactions were reported, the Company believes that during the fiscal year ended December 31, 2022 the Company’s officers, directors and greater than ten percent owners timely filed all reports they were required to file under Section 16(a); except that one report, covering one transaction, was filed late by Mr. Bennett and one report, covering one transaction, was filed late by Mr. Eubanks.
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Title of Securities | | Name of Stockholder | | Number of Shares Beneficially Owned | | Percent of Class(1) | |
---|
Common Stock | | The Vanguard Group, Inc. | | | 14,873,483 | (2) | | 15.5 | % |
Common Stock | | Monty J. Bennett | | | 6,693,615 | (3) | | 6.6 | % |
Common Stock | | Archie Bennett, Jr. | | | 5,189,942 | (3) | | 5.4 | % |
Common Stock | | Blackrock, Inc. | | | 6,561,830 | (4) | | 6.0 | % |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS (1)- This section of the proxy statement describes certain relationships and related person transactions we have that could give rise to conflicts of interest. A “related transaction” is any transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships, since the beginning of our last fiscal year or currently proposed, in which: (i) our Company was or is to be a participant, (ii) the amount involved exceeds $120,000, and (iii) any related person had or will have a direct or indirect material interest.
A “related person” means: (i) any director, director nominee or executive officer of the Company, (ii) any person known to the Company to be the beneficial owner of more than 5% of its outstanding voting stock at the time of the transaction, (iii) any immediate family member of either of the foregoing, or (iv) a firm, corporation or other entity in which any of the foregoing is a partner or principal or in a similar position or in which such person has at least a 10% equity interest.
Conflict of Interest Policies We take conflicts of interest seriously and aim to ensure that transactions involving conflicts or potential conflicts are thoroughly examined and only approved by independent Board members.
Because we could be subject to various conflicts of interest arising from our relationships with Braemar and Ashford Inc., including its subsidiaries, their respective affiliates and other parties, to mitigate any potential conflicts of interest, we have adopted a number of policies governing conflicts of interest. As described further in “Board of April 14, 2016, there were outstandingDirectors and entitled to vote 95,686,992 sharesCommittees-Board Member Independence” above, our bylaws require that, at all times, a majority of common stock.
(2)Based on information provided by The Vanguard Group, Inc. ("Vanguard Group") in an amendment to Schedule 13G filed with the Securitiesour Board be independent directors, and Exchange Commission on February 10, 2016. Per its Schedule 13G, Vanguard Group has sole voting power over 236,326our Corporate Governance Guidelines require that two-thirds of such shares, shared voting power over 84,570 of such shares, sole power to dispose of 14,680,095 of such shares and shared power to dispose of 193,388 of such shares. Includes 6,872,646 shares of common stock held by Vanguard Specialized Funds-Vanguard REIT Index Fund ("Vanguard Fund"), based on information provided by the Vanguard Fund in an amendment to Schedule 13G filed with the Securities and Exchange Commission on February 9, 2016. Per its Schedule 13G, the Vanguard Fund has sole voting power overour Board be independent directors at all such shares and doestimes that we do not have solean independent chairman.Our Corporate Governance Guidelines provide that, in order to mitigate potential conflicts of interest, any waiver, consent, approval, modification, enforcement, or shared dispositive power overelections which the Company may make pursuant to any agreement between the Company, on the one hand, and any of such shares. The principal business addressthe following entities, on the other hand, shall be within the exclusive discretion and control of Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(3)The total number of sharesa majority of the company's common stock outstanding used in calculating the percentage assumes that operating partnership units heldindependent directors: (a) Braemar or any of its subsidiaries; (b) Ashford Inc. or any of its subsidiaries; (c) any entity controlled by this person, including LTIP units that have achieved economic parity with our common stock, are converted into common stock but none of the operating units held by other people is converted into common stock. Each ofMr. Monty J. Bennett and/or Mr. Archie Bennett, Jr.; and Mr. Monty Bennett owns(d) any other entity advised by Ashford Inc. or its subsidiaries.Additionally, our Board has adopted our Code of Business Conduct and Ethics, which includes a portionpolicy for review of their shares indirectly.
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(4)Based on information provided by Blackrock, Inc.any transactions in which an amendment to Schedule 13G filedindividual’s private interests may interfere or conflict in any way with the Securities and Exchange Commission on January 25, 2016. Per its Schedule 13G, Blackrock, Inc. has sole voting power of 6,561,830 of such shares and sole dispositive power over all such shares. The principal business address of Blackrock, Inc. is 40 East 52nd Street, New York, New York 10055.
Section 16(a) Beneficial Ownership Reporting Compliance
To our knowledge, based solely on reviewinterests of the copiesCompany. Pursuant to the Code of Forms 3, 4Business Conduct and 5 furnishedEthics, employees must report any actual or potential conflict of interest involving themselves or others to usour Executive Vice President, General Counsel and written representations that noSecretary. Directors must make such report to our Executive Vice President, General Counsel and Secretary or the Chairman of the Nominating and Corporate Governance Committee. Officers must make such report to the Chairman of the Nominating and Corporate Governance Committee.
Our Related Party Transactions Committee is a committee composed of three independent directors and is tasked with reviewing any transaction in which our officers, directors, Ashford Inc. or Braemar or their officers, directors or respective affiliates have an interest, including our advisor or any other reports were required, during the year ended December 31, 2015, other than as disclosed herein, allrelated party and their respective affiliates, before recommending approval by a majority of our independent directors. The Related Party Transactions Committee can deny a new proposed transaction or recommend for approval to the independent directors. Also, the Related Party Transactions Committee periodically reviews and reports to our independent directors executive officerson past approved related party transactions. Finally, our directors also are subject to provisions of Maryland law that address transactions between Maryland corporations and beneficial owners of more than ten percentour directors or other entities in which our directors have a material financial interest. Such transactions may be voidable under Maryland law, unless certain safe harbors are met. Our charter contains a requirement, consistent with one such safe harbor, that any transaction or agreement involving us, any of our common stock were in compliance withwholly owned subsidiaries or our operating partnership and a director or officer or an affiliate or associate of any director or officer requires the Section 16(a) filing requirements. Messrs. Bennett, Welter and Hays may be deemed to have failed to timely fileapproval of a required Form 4 inasmuch as certain Form 4s that were originally filed on behalfmajority of such individuals incorrectly reported the target number of performance LTIPs subject to performance-based vesting that were awarded rather than the maximum amount granted and subject to forfeiture.disinterested directors.
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