DEF 14A of Host Hotels & Resorts, Inc.
Filed Apr 5, 2024 · FY20230001070750-24-000110
Board Nominees
Board Nominees The following table provides summary information about each director nominee. Directors are elected annually by a majority of the votes cast.
Board Nominees
| | Director Since | | Committee Memberships* | | | Other U.S. Public Company Boards | | Name, Age | | Principal Occupation | A | C | NGCR | | | Mary L. Baglivo, 66 | 2013 | Chief Executive Officer The Baglivo Group | | | | Urban Edge Properties Ollie's Bargain Outlet Holdings | | Herman E. Bulls, 68 | 2021 | Vice Chairman, Americas Jones Lang LaSalle | (F) | | | Comfort Systems, USA Fluence Energy | | Diana M. Laing, 69 | 2022 | Former Chief Financial Officer of American Homes 4 Rent | (F) | | | CareTrust REIT Alexander & Baldwin | | Richard E. Marriott, 85 | 1993 | Chairman of the Board | | | | | | Mary Hogan Preusse, 55 | 2017 | Founder and Principal of Sturgis Partners LLC | (F) | | | Digital Realty Trust Kimco Realty Realty Income | | Walter C. Rakowich, 66 | 2012 | Former Chief Executive Officer of Prologis | (F) | | | Iron Mountain Inc. Ventas, Inc. | | James F. Risoleo, 68 | 2017 | President and Chief Executive Officer | | | | | | Gordon H. Smith, 71 Independent Lead Director | 2009 | Former President & CEO of the National Association of Broadcasters | | | | Beasley Broadcast Group, Inc. | | A. William Stein, 70 | 2017 | Former Chief Executive Officer of Digital Realty Trust | (F) | | | |
Board Nominees
| *A | Audit Committee | C | Culture and Compensation Committee | | | Chair of the Committee | NGCR | Nominating, Governance and Corporate Responsibility Committee | | (F) | Audit Committee Financial Expert | | |
Director Nominee Highlights
Director Nominee Highlights The Committee believes that each of the nominees possesses the key attributes that are important to an effective Board. Each director nominee holds or has held senior executive positions in large organizations or the government and has experience relevant to the Company’s business. Our directors also serve on the boards of other public and private companies and have an understanding of corporate governance practices and trends. The Committee has also taken into account diversity considerations in determining the slate of directors and believes that, as a group, the nominees bring a broad range of perspectives to Board deliberations. The director nominees have served on our Board for an average of approximately 10 years. The median tenure of our director nominees is seven years. The Committee also considered the specific experiences described in the biographical details that follow in determining to nominate the individuals set forth below for election as directors.
Director Nominee Highlights
| INDEPENDENCE 78% independent (all director nominees except CEO and Executive Chairman) | | | HOST POLICY: A majority of non-management directors must be independent | |
Nominees For Director
Nominees For Director
Nominees For Director
| MARY L. BAGLIVO | Ms. Baglivo is the chief executive officer of the Baglivo Group, a strategy consulting company. She has extensive knowledge and experience in the fields of global marketing, advertising, consumer branding, market research, public relations, crisis communications, and strategic planning. She has held chief marketing officer roles at several universities, including Rutgers, Northwestern and Pace. Ms. Baglivo previously served as chair and chief executive officer, the Americas at Saatchi & Saatchi Worldwide from 2008 to 2013, and chief executive officer, New York from 2004 to 2008. Prior to joining Saatchi & Saatchi, she was president of Arnold Worldwide from 2002 to 2004 and chief executive officer of Panoramic Communications from 2001 to 2002. | | | | | | SKILLS AND EXPERTISE: | | | u in-depth global and digital marketing, advertising, consumer branding, market research, public relations and crisis communications experience ustrong strategic planning expertise u extensive business, corporate governance, and leadership experience of large complex companies u in-depth understanding of growth strategies in worldwide branded businesses u extensive environmental, social and governance expertise, including active engagement in initiatives in the fields of greenhouse gas emissions, waste reduction, energy conservation, worker safety, and diversity, equity, inclusion and belonging while serving as the chair or a member of corporate responsibility and social responsibility committees of public companies | | Age: 66 Director since: 2013 Independent | | | Committees: Culture and Compensation (Chair) Nominating, Governance and Corporate Responsibility | | | Current Public Boards: Urban Edge Properties Ollie's Bargain Outlet Holdings Prior Public Boards: PVH Corp. Ruth’s Hospitality Group | |
Nominees For Director
| HERMAN E. BULLS | Mr. Bulls currently serves as vice chairman, Americas, and as an international director at Jones Lang LaSalle. During over 34 years at Jones Lang LaSalle, he has worked in the areas of development, investment management, asset management, facilities operations, marketing and business development/retention and founded the company’s public institutions business unit. Mr. Bulls previously co-founded and served as president and CEO of Bulls Capital Partners, a Fannie Mae multi-family financing company, and founded Bulls Advisory Group, LLC, a management and real estate advisory firm. Prior to joining Jones Lang LaSalle, he completed almost 12 years of active-duty service with the United States Army, retiring as a Colonel in the U.S. Army Reserves in 2008. Mr. Bulls is a member of the Executive Leadership Council, Leadership Washington, the Real Estate Executive Council and the Real Estate Advisory Committee for New York State Teachers’ Retirement System. Mr. Bulls is a founding member and served as the inaugural president of the African American Real Estate Professionals of Washington, D.C. and he serves as vice chairman of the University Development and Innovation Council of the Urban Land Institute. He is also a member of the Defense Policy Board, which provides the Secretary of Defense advice and opinions on matters of defense policy. | | | | | Age: 68 Director since: 2021 Independent | | | | SKILLS AND EXPERTISE: | | Committees: Audit Nominating, Governance and Corporate Responsibility | u real estate industry veteran with over 34 years of experience in the areas of real estate development, investment management, asset management and operations u thought leader and strategic advisor who guides companies and senior executives on ESG matters relating to sustainability, social justice, corporate governance and the environment u experience overseeing IT and cyber security matters through service on public company risk and audit committees uformer chair of risk committee for a Fortune 200 financial services corporation uaudit committee financial expert | | Current Public Boards: Comfort Systems, USA Fluence Energy | | | Prior Public Boards: American Campus Communities Computer Sciences Corporation Tyco International Excelis | |
Nominees For Director
| MARY HOGAN PREUSSE | Ms. Hogan Preusse is the founder and principal of Sturgis Partners, an advisory firm. She was formerly at APG Asset Management U.S. from 2000 to 2017. At APG she served as the managing director and co-head of Americas Real Estate where she was responsible for managing all of APG’s public real estate investments in the Americas. She also served on the executive board of APG Asset Management US from 2008 to 2017. Prior to joining APG, Ms. Hogan Preusse spent eight years as a sell side analyst covering the REIT sector, and began her career at Merrill Lynch as an investment banking analyst. Her industry memberships include NAREIT, where she serves as a member of the Advisory Board of Governors and is a founder and former co-chair of the Dividends Through Diversity, Equity & Inclusion Steering Committee. | | | | | | SKILLS AND EXPERTISE: | | | u contributes valuable investment focus to the Board with over 30 years of real estate experience, including managing a $13 billion portfolio in real estate investment trusts and other public real estate securities urecognized expertise and leadership in the real estate sector and in 2015 received NAREIT’s E. Lawrence Miller Industry Achievement Award for her contributions to the industry uexperienced executive and corporate director with extensive knowledge of ESG matters through her in-depth work in real estate investing and as a public company director u founder and member of the Dividends Through Diversity, Equity & Inclusion Steering Committee, NAREIT’s diversity and inclusion initiative uaudit committee financial expert | | Age: 55 Director since: 2017 Independent | | | Committees: Audit Culture and Compensation | | | Current Public Boards: Digital Realty Trust Kimco Realty Realty Income | |
Nominees For Director
| DIANA M. LAING | Ms. Laing has more than 35 years of experience as a chief financial officer and public company executive with extensive experience in real estate investment and operating companies. She was the chief financial officer of American Homes 4 Rent, a REIT investing in single-family rental homes, until her retirement in June 2018. More recently, Ms. Laing was interim chief financial officer for Alexander & Baldwin, a REIT investing in commercial properties in Hawaii, from November 2018 to May 2019. Prior to American Homes 4 Rent, she was chief financial officer and corporate secretary for Thomas Properties Group, Inc., and chief financial officer for New Pacific Realty Corporation and Arden Realty. Ms. Laing began her career as an auditor with Arthur Anderson & Co. | | | | | | SKILLS AND EXPERTISE: | | | useasoned corporate finance executive with a career focused on real estate investment and operating companies usubstantial knowledge of corporate governance and sustainability matters, including the development and ownership of sustainable and LEED®-certified properties, obtained through public company executive and director roles uextensive knowledge of IT and cybersecurity matters, including cybersecurity assessments, controls, protocols, training, monitoring and incident response, obtained through responsibility for IT department leadership and activities in each CFO role uin-depth experience with complex public companies in accounting, financial reporting, capital markets, finance, corporate strategy, risk management and information technology uaudit committee financial expert | | Age: 69 Director since: 2022 Independent | | | Committees: Audit Nominating, Governance and Corporate Responsibility | | | Current Public Boards: CareTrust REIT Alexander & Baldwin Prior Public Boards: The Macerich Company Spirit Realty Capital | |
Nominees For Director
| RICHARD E. MARRIOTT | Mr. Marriott is our chairman of the board. He is also chairman of the board of First Media Corporation, the chairman and a director of the J. Willard Marriott and Alice S. Marriott Foundation, a director of the Richard E. and Nancy P. Marriott Foundation, and the president and a trustee of the Marriott Foundation for People with Disabilities. Mr. Marriott serves on the National Advisory Council of Brigham Young University. He previously served on the board of Marriott International, Inc. and the Federal City Council, and is a past president of the National Restaurant Association and a past director of the Polynesian Cultural Center. | | | | | | SKILLS AND EXPERTISE: | | | ucomprehensive knowledge of the Company and unique perspective and insight into the hospitality industry based on a 58-year history with the Company and Marriott International uduring his tenure, Mr. Marriott has served in various executive capacities and has served as our Chairman since 1993 ulong history of successful management of the Company | | Chairman of the Board | | | Age: 85 Director since: 1993 | |
Nominees For Director
| WALTER C. RAKOWICH | Mr. Rakowich is the former chief executive officer of Prologis, where he worked for 18 years before retiring in December 2012. Mr. Rakowich served as chief executive officer of Prologis from 2008 to 2011, when Prologis merged with AMB Property Corporation. He then assumed the role of co-chief executive officer and served as a member of the Prologis board of directors to manage the integration of the two companies. Prior to his service as chief executive officer, Mr. Rakowich held a number of senior management positions while at Prologis, including as president and chief operating officer from 2005 to 2008, and managing director and chief financial officer from 1998 to 2005. Prior to joining Prologis, Mr. Rakowich was a partner with real estate provider Trammell Crow Company and before that he was a senior audit and tax consultant for Pricewaterhouse. | | | | | | SKILLS AND EXPERTISE: | | | usignificant real estate and financial experience, including extensive knowledge of the issues facing large international real estate investment trusts u valuable experience with respect to risk assessment, strategic planning and leadership development obtained through public company executive and director roles uas president and CEO of Prologis, had extensive involvement in the creation and oversight of Prologis’ ESG initiatives uas CFO of Prologis, was responsible for the management and performance of IT operations uextensive experience in accounting and financial reporting obtained through his time at Pricewaterhouse and Prologis uaudit committee financial expert | | Age: 66 Director since: 2012 Independent | | | Committees: Audit (Chair) Nominating, Governance and Corporate Responsibility | | | Current Public Boards: Iron Mountain Ventas | |
Nominees For Director
| JAMES F. RISOLEO | Mr. Risoleo became our president and chief executive officer in January 2017. He joined our Company in 1996 as senior vice president for acquisitions and development and was appointed executive vice president and chief investment officer in 2000. In 2012, he became executive vice president and managing director of the Company’s European business activities and, in 2015, Mr. Risoleo assumed leadership for all of the Company’s west coast investment activities in addition to Europe. Prior to joining our Company, Mr. Risoleo was vice president, development at Interstate Hotels Corporation and a senior vice president, commercial real estate at Westinghouse Electric Corporation. Mr. Risoleo is a past chairman of NAREIT. He is also an executive committee member of the American Hotel & Lodging Association, a member of the U.S. Travel Association CEO Roundtable, and a member of the Real Estate Roundtable. Mr. Risoleo is also a member of the Bar of the State of Pennsylvania. | | | | | | SKILLS AND EXPERTISE: | | | uextensive business, leadership and strategic planning experience usignificant expertise in finance, equity and capital development, real estate and the hospitality industry uover 30 years of domestic and international hotel experience in investment, dispositions, capital budgets and asset management uextensive knowledge of the Company as a member of senior management for over 20 years, serving in various roles within the Company and culminating in his current service as CEO uin-depth understanding of public company governance and ESG initiatives, including leading the Company to receive corporate responsibility awards and ESG recognition from Dow Jones Sustainability indices, CDP, and other ESG-focused organizations | | President and Chief Executive Officer | | | Age: 68 Director since: 2017 | | | Prior Public Boards: Griffin Realty Trust (and its predecessor Cole Office & Industrial REIT) | |
Nominees For Director
| GORDON H. SMITH | Senator Smith served as president and chief executive officer of the National Association of Broadcasters from 2009 to December 2021. He has also served as a senior advisor at Covington & Burling LLP as a member of the government affairs and international trade practice groups. In 2008, Senator Smith completed his second term as a United States Senator from the State of Oregon, where he served on the Commerce, Science and Transportation Committee; the Energy and Natural Resources Committee; the Finance Committee; and the Indian Affairs Committee. In addition, he was a ranking member of the Senate Finance Subcommittee on International Trade and Global Competitiveness and for six years chaired the Senate Foreign Relations Subcommittee on European Affairs. Prior to his election to the United States Senate, he directed the operations of Smith Frozen Foods, his family’s frozen food processing business and is currently chairman of the board of Smith Frozen Foods, which is privately held. In 1992, he was elected to the Oregon State Senate, of which he became president in 1995. He also previously practiced law in the States of New Mexico and Arizona. | | | | | Age: 71 Director since: 2009 Independent Lead Director | SKILLS AND EXPERTISE: | | | uhigh-level U.S. government experience and leadership as a United States Senator u extensive knowledge of public policy, international affairs and trade and law usignificant business experience and in-depth knowledge of finance, accounting and marketing obtained through his management of Smith Frozen Foods uvaluable insight into and knowledge of climate change initiatives obtained through membership on the Senate Committee on Energy and Natural Resources u valuable insight into and knowledge of IT and cybersecurity matters obtained through membership on the Senate Committee on Energy and Natural Resources | | Committees: Culture and Compensation Nominating, Governance and Corporate Responsibility (Chair) | | | Current Public Boards: Beasley Broadcast Group, Inc. | |
Nominees For Director
| A. WILLIAM STEIN | Mr. Stein was the chief executive officer and a director of Digital Realty Trust, a REIT focused on data centers, from 2014 until December 2022. Prior to being named chief executive officer in 2014, he served as chief financial officer and chief investment officer. Before joining Digital Realty in 2004, Mr. Stein was with GI Partners, a private equity fund. Past positions include serving as co-head of VentureBank@PNC and Media and Communications Finance at The PNC Financial Services Group; president and chief operating officer of TriNet Corporate Realty Trust (acquired by iStar) and a variety of senior investment and financial management positions with Westinghouse Electric, Westinghouse Financial Services and Duquesne Light Company. Mr. Stein serves as a director of Salute Mission Critical, a private company, and he serves on the Advisory Boards of Pennybacker Capital and Crusoe Energy. Mr. Stein also serves on the board of directors of I Have a Dream Foundation, a nonprofit organization, and on the Chancellor's Advisory Board of the University of Pittsburgh. Mr. Stein is a member of the Bar of the States of Pennsylvania and Florida. | | | | | | SKILLS AND EXPERTISE: | | | uover 30 years of investment, financial and operating management experience and an in-depth understanding of the real estate industry and the issues facing real estate investment trusts u extensive leadership and corporate governance experience, including as CEO of Digital Realty Trust u served as co-chair of NAREIT’s Dividends Through Diversity, Equity & Inclusion CEO Council u led Digital Realty Trust’s sustainability initiatives that resulted in the company winning NAREIT’s Leader in the Light award for the datacenter category six times during his tenure and gained insight into global ESG matters as a member of the Chancellor’s Global Advisory Council at the University of Pittsburgh u extensive knowledge of IT infrastructure matters and cybersecurity obtained through customer engagement and senior executive oversight as CEO of Digital Realty Trust u audit committee financial expert | | Age: 70 Director since: 2017 Independent | | | Committees: Audit Culture and Compensation | | | Prior Public Boards: Digital Realty Trust | |
Our Compensation Program
| Foster a strong relationship between stockholder interests and executive compensation | Provide annual and long-term incentives that emphasize performance-based compensation | Provide overall levels of compensation that attract, retain and motivate talented executives |
SUMMARY OF 2023 EXECUTIVE COMPENSATION PROGRAM DESIGN
| | CASH COMPENSATION | | EQUITY COMPENSATION | | | | Base Salary | Annual Cash Incentive Awards | Performance-Based Long-Term Incentive Awards | Time-Based Long- Term Incentive Awards | | Key Characteristics | üFixed compensation component payable in cash. üReviewed annually and adjusted when appropriate. | üAt-risk compensation component payable annually in cash. üAmount payable is based on actual performance against annually established goals. | ü60% of the value of equity awards is performance-based. üHalf of the performance-based award is eligible to vest at the end of three years based on Adjusted EBITDAre performance. üThe remaining half of the performance-based award is eligible to vest at the end of three years based on relative TSR performance. | ü40% of the value of equity awards is time-based. üEquity award that vests in annual installments over three years. | | Why We Pay This Element and How it Incentivizes Execution of Our Strategy | üProvide a base level of competitive cash compensation for executive talent. üOnly component of compensation that is fixed. | üMotivate and reward executives for performance based on the Company’s achievement of key financial measures and individual performance, determined by each executive’s contribution to achieving the Company’s annual business plan. | ü Motivate and reward executives for performance on key measures. üAlign the interests of executives with long-term stockholder value. üMeasures collective success at achieving pre-determined goals that drive stockholder value. | üAlign the interests of executives with long-term stockholder value. üRetain executive talent. | | How We Determine Amount | üExperience, job scope, market data, and individual performance. üSalaries of the named executive officers and department heads are approved by the Culture and Compensation Committee. | üFormulaic determination with a limit on the maximum amount payable. | üTarget awards are based on job scope, market data, and individual performance. üAmount of the awards that ultimately vest is capped. | üTarget awards are based on job scope, market data, and individual performance. |
PROCESS FOR SETTING TARGET COMPENSATION FOR 2023
PROCESS FOR SETTING TARGET COMPENSATION FOR 2023 The Culture and Compensation Committee annually reviews and approves total target direct compensation for senior executives. This consists of a salary, an annual cash incentive based on the target level of performance, an award of performance-based restricted stock units valued based on the target level of performance and an award of time-based restricted stock units that vest over three years. When approving total target compensation for senior executives, the Committee reviews tally sheets that detail the various elements of compensation for each executive officer. These tally sheets are used to evaluate the appropriateness of the total compensation package, to compare each executive officer’s total compensation opportunity and to ensure that the compensation appropriately reflects the compensation program’s focus on pay for performance. In addition to the tally sheets, data from three additional sources provided by Pay Governance, its independent consultant, were used by the Committee to provide context for use in setting target compensation: (1) pay data reported in 2022 proxy filings for peer companies, (2) 2022 general industry survey data of companies for non-real estate specific functions, size adjusted based on revenues, and (3) 2022 McLagan survey data focused on companies of similar size in terms of total capitalization. For more information on these data sources, the specific peer companies used and the Committee’s benchmarking process, see “Role of the Culture and Compensation Committee, Market Data and Peer Group” in this CD&A. The Committee used these data sources as a reference point to inform its establishment of compensation levels but did not target a specific compensation level relative to the data sources for any named executive officers. The Committee determined the size of each individual’s target compensation for 2023 based on each named executive officer’s responsibilities and expected contributions. Target compensation for each component of the 2023 compensation program is set forth below for each named executive officer in the “2023 Compensation” section that follows.
2023 Compensation
2023 Compensation The Committee considered the following overarching principles in arriving at its 2023 compensation decisions: uListen to and Align with Stockholders: Carefully consider the feedback provided by stockholders during management’s extensive ESG-focused stockholder engagement initiative and make compensation decisions that are responsive to their views and appropriately aligned with their interests. In 2021, as a result of this feedback, the Company redesigned the performance-based portion of the Company’s long-term incentive program to be based 100% on quantitative goals and shifted to full three-year cliff vesting of these awards beginning in 2022. Our 2023 performance-based long-term incentive program continued to follow this design. uEstablish Appropriate Performance Measures: Take a holistic approach to goal setting and its implications for compensation. Review all metrics used in the program and make changes where appropriate to focus on value creation following the pandemic, while still retaining and strengthening the program’s use of objective, quantitative metrics to evaluate performance. uRecognize Strong Performance and Leadership: Reward strong leadership, creative thinking, agility and successful execution of the Company’s business plan, including: delivering strong operational improvements; allocating capital through multiple means including reinvestments in our hotels, dividends and share repurchases; and completing the Company’s three key strategic objectives outlined earlier. uConsider the Efforts of All Employees: Ensure that the Committee’s executive compensation decisions are consistent with compensation decisions for employees at all levels within the Company. uEvaluate Executive Performance on an Individual Basis: Ensure that executives are evaluated on an individual basis, rather than taking a one-size-fits-all approach, and that the evaluations take into account each executive’s contributions to and performance against the Company’s specific business objectives. uMotivate and Retain Key Employees and Executives: Ensure that compensation opportunities continue to retain and motivate the Company’s key employees and executives over the near-term and long-term. uUnderstand the Broader Compensation Landscape: Work closely with the Committee’s independent compensation consultant to evaluate and understand how companies within and outside our peer group are approaching compensation decisions. Set forth below is a detailed discussion of each element of our 2023 compensation program for our named executive officers, the decisions the Compensation Committee made in establishing executive compensation and the compensation received by our named executive officers as a result of Company performance.
ANNUAL CASH INCENTIVE
ANNUAL CASH INCENTIVE All employees participate in the annual cash incentive program. 2023 awards for the named executive officers are based on (1) the Company’s performance against two annual financial metrics, capital expenditure (capex) cash flow and return on invested capital (ROIC), and (2) individual performance based on contributions to achieving the Company’s annual business plan. These metrics for our annual incentive plan were approved by the Culture and Compensation Committee in February 2023. The annual cash incentive was weighted as follows for the named executive officers: Capex cash flow is an operational metric measuring capital expenditures. To maintain the quality and competitiveness of the Company’s hotels, increase revenue and reduce operating costs, the Company must make strategic reinvestment in our assets through capital expenditures. The effectiveness of these investments can be measured in future RevPAR index improvements (a measure of market share) and increased earnings. Target capital expenditures for 2023 were calculated based on the Board-approved capital plan, which excludes extraordinary events and is adjusted for hotel acquisitions and dispositions. This metric measures the Company’s achievement on completing the 2023 capital expenditure plan based on the actual cost versus the budget (i.e., the lower the spending on a capital project relative to the budget, the greater the level of achievement). The Board receives quarterly updates and monitors progress on the capital expenditure plan. The second metric used was ROIC, which is a return metric that provides an emphasis on investing capital effectively and is calculated by dividing hotel level EBITDA by total invested capital for our comparable hotel properties. As the Company has invested heavily in its hotels in recent years through the Marriott Transformational Capital Program and other significant redevelopment projects, ROIC is an important tool for measuring the effectiveness of the Company’s investment strategy. For more information on Comparable Hotel EBITDA and a reconciliation to the applicable GAAP measure, see the Company’s Annual Report on Form 10-K in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparable Hotel Results for Host Inc. and Host L.P.” on page 78. Individual performance is assessed based on each executive’s contribution towards predetermined business objectives as set forth in the annual business plan. The business objectives for 2023 related to hotel revenue performance, implementing cost savings, capital allocation strategy, value enhancement, and redevelopment at our properties, the capital expenditure plan, enterprise analytics, investor relations, corporate responsibility, and organizational matters relating to culture, employee engagement, and diversity, equity, inclusion and belonging. The Committee believes that including an individual performance component in the annual bonus plan is an important tool in motivating the executives to produce measurable performance results for the Company as a whole and for the executive’s individual area of responsibility, emphasizes the importance of teamwork and recognizes each executive’s role in achieving corporate imperatives. In 2023, the target annual cash incentive represented between 16% and 24% of the named executive officers’ total target direct compensation. The total amount that a named executive officer may earn depends on: (1) salary or eligible earnings, because the award is calculated and paid as a percentage of the annual salary or amount earned, (2) the level of performance achieved on capex cash flow and ROIC, and (3) the level of performance achieved on individual performance towards predetermined business objectives based on the Company’s annual business plan. Performance objectives were set early in 2023 at threshold, target and high levels and results are interpolated between these levels. The percentage of target earned for each performance level is as follows: threshold – 50%; target – 100%; and high – 200%. There is no bonus earned for a particular metric if performance is below threshold, and bonuses are capped at the high level. The chart below shows the target annual incentive award as a percentage of salary for each named executive officer in 2023. There were no changes to the target annual incentive awards as a percentage of salary from the prior year. TARGET ANNUAL INCENTIVE
ANNUAL CASH INCENTIVE
| Name | Salary | Target as % of Salary | Target Annual Incentive | | Mr. Risoleo | $1,050,000 | 170 | $1,785,000 | | Mr. Ghosh | 600,000 | 100 | 600,000 | | Mr. Tyrrell | 600,000 | 100 | 600,000 | | Ms. Aslaksen | 510,000 | 100 | 510,000 | | Mr. Lentz | 500,000 | 100 | 500,000 |
ANNUAL CASH INCENTIVE
2023 Results on Financial Measures: The threshold, target and high goals for capex cash flow and ROIC were established in February 2023 by the Culture and Compensation Committee based on, and subject to review and approval of, the Company’s 2023 business plan and budget by the Board of Directors. The chart below shows these measures and the Company’s actual results for 2023, which were determined by the Committee in February 2024. 2023 ACTUAL RESULTS ON FINANCIAL MEASURES
ANNUAL CASH INCENTIVE
| Corporate Measure | Threshold | Target | High | Actual | | Capex Cash Flow | $600,000,000 | $572,000,000 | $546,000,000 | $458,000,000 | | ROIC | 8.52% | 9.47% | 10.42% | 10.29% |
ANNUAL CASH INCENTIVE
Capex Cash Flow: Despite continued supply chain challenges and construction commodity uncertainties, the Company completed 140 Host-managed capex projects in 2023, including the multi-year Marriott Transformational Capital Program, realizing approximately $18 million in project savings. The Company also effectively managed capex required for unplanned projects and planned replacements, reducing capex spend by $12 million and $25 million, respectively. The Company’s final outcome was significantly under budget which resulted in high performance achievement. Return on Invested Capital: Performance against the 2023 ROIC metric was achieved above “target” due to: (1) the Company’s continued efforts to reduce traditionally fixed hotel expenses; (2) progress towards its strategic goal to reimagine the hotel operating model in areas such as streamlined property leadership and lower brand cost allocations; and (3) operational outperformance by the Company’s newly renovated hotels as part of its redevelopment efforts, including the success of the Marriott Transformational Capital Program. For more information on the factors that led to the strong ROIC results, see 2023 Company Performance Highlights at the beginning of this CD&A, specifically “Reinvestment in Portfolio and Disposition,” “Redefining the Operating Model,” “Comprehensive Renovations to Gain Market Share,” and “Allocated Capital to Development ROI Projects.” 2023 Results on Individual Performance Goals: The Committee spent considerable time evaluating the 2023 performance of our senior management team, including the named executive officers. For the named executive officers, the Committee reviewed and discussed each executive’s performance at its December 2023, January 2024 and February 2024 meetings after reviewing individual assessments and receiving input from Mr. Risoleo (for executives other than himself). The Committee discussed each of the named executive officer’s performance based on their individual contributions towards predetermined business objectives as set forth in the Company’s annual business plan and the impact of individual performance on the overall successes of the Company. The Committee provided its recommendations to the independent directors of the Board in an executive session. The Committee determined that each named executive officer performed at exemplary levels and showcased strong leadership in continuing to navigate the Company and its employees through the continuing recovery from the COVID-19 pandemic and in delivering strong year-over-year operational improvements, as demonstrated by the many accomplishments set forth at the beginning of this CD&A. The tables below describe the individual contributions of each named executive officer. The individual performance results achieved for each named executive officer for 2023 were as follows: Mr. Risoleo – high; Mr. Ghosh – high; Mr. Tyrrell – exceeds target; Ms. Aslaksen – exceeds target; and Mr. Lentz – high. SUMMARY OF INDIVIDUAL PERFORMANCE ACHIEVEMENT
ANNUAL CASH INCENTIVE
| Individual Performance for Mr. Risoleo | | üOversaw the Company’s collaborative effort to focus on engagement with third party managers to deliver strong top-line 2023 performance while maintaining expense discipline and enhancing cash flow and profitability; results exceeded budget and consistently beat analysts’ expectations and consensus estimates üChampioned strategic investment of capital in the Company’s existing portfolio to position the Company to gain market share; led efforts to successfully complete over 140 capital investment projects on time and under budget despite supply chain issues and to complete the Marriott Transformational Capital Program on schedule and under budget; oversaw the successful negotiations with Hyatt on the approximately $550 -$600 million Hyatt Transformational Capital Program üOversaw completion of the sale of The Camby for $110 million and repayment of the Sheraton Boston and New York seller financings; continued to expand relationships with hotel owners, brokers, managers and lenders to facilitate future investment opportunities üOversaw the Company’s capital allocation strategies, including the repurchase of $181 million in Company stock at an average price of $15.93 and returned the Company to pre-pandemic quarterly dividend level of $0.20 per share üHosted Florida investor day showcasing Orlando World Center renovation and the Four Seasons Orlando Resort at Walt Disney World® Resort; championed enhancement of Investor Relations materials and re-designed website to amplify the Company’s story; actively engaged with 274 investors across 154 firms to share the Company's strategic vision and attended 10 conferences; hosted multiple property tours as well as interviews with top-tier trade media publications üChampioned and provided guidance on corporate responsibility strategy, including the development of the Company’s 2030 goals in support of the Company’s 2050 vision of becoming net positive; led, together with our hotel operators, the establishment of 501(c)(3) organizations providing significant direct relief to Maui hotel properties; founding member of NAREIT’s Dividends Through Diversity, Equity & Inclusion CEO Council and continued involvement with the CEO Action for Diversity and Inclusion coalition |
ANNUAL CASH INCENTIVE
| Individual Performance for Mr. Ghosh | | üLed Enterprise Analytics team in conjunction with Asset Management to drive consistent engagement with third party managers to exceed 2023 hotel budget forecasts, including increased total revenues while maintaining expense discipline; led Enterprise Analytics initiative to reduce expenses and drive revenue through property “deep-dives” üInitiated and reviewed financial analysis to guide capital expenditures program and evaluation of return-on-investment projects; led feasibility analysis to enable decision making on value enhancement and redevelopment projects as well as investment and disposition opportunities üLed Business Intelligence and Revenue Management teams in collaboration with Asset Management to drive revenue recovery, pursue market share gains at renovated hotels and evolve the hotel operating model in substantial completion of one of the Company’s key strategic objectives üHosted Florida investor day showcasing Orlando World Center renovation and the Four Seasons Orlando Resort at Walt Disney World® Resort; continued to showcase the portfolio and amplify the Company’s story through enhanced Investor Relations presentations, a redesigned website and investor outreach and event participation; conducted meetings with 274 investors across 154 firms in 2023 and attended 10 conferences and gave multiple property tours üLed property insurance renewal process in a challenging environment which resulted in a favorable outcome for the Company; continued to oversee insurance claims process related to Hurricane Ian and the Maui wildfires üSuccessfully led refinancing of $185 million delayed drawn loan secured by the Harbor Beach Marriott and $84 million seller financing secured by The Camby üEnhanced relationships with rating agencies, bankers and brokers through in-person meetings and property tours | | Individual Performance for Mr. Tyrrell | | üLed Asset Management team which delivered strong top-line and Adjusted EBITDAre performance despite the effects of the Maui wildfires; worked with our operators to implement sustainable cost savings and changes to the hotel operating model to reduce costs in substantial completion of 2021 objective üInitiated and oversaw negotiations for the Hyatt Transformational Capital Program, which was finalized in November 2023; Program entails approximately $550-$600 million of investment in six hotels over three to four years üCompleted sale of The Camby for $110 million with seller financing and completed 1031 like-kind-exchange with the Four Seasons Jackson Hole acquisition, leading to significant tax savings for the Company; oversaw extensions and repayment of seller financing for the Sheraton New York and Boston properties üHelped reprioritize current and future year capital expenditure plans to seek to improve returns, minimize disruption and strategically position hotels for outperformance üGuided strategy and analysis for redevelopment projects, management company changes and excess land sales; proactively pursued ground lease modifications and alternative use opportunities üEngaged with industry contacts to stay abreast of the M&A landscape and evaluated numerous investment opportunities against challenging backdrop for deals üServed as co-executive sponsor of the Company’s Women’s inspirational Network (WIN), leading events and connecting WIN with Marriott’s Women in Leadership group |
ANNUAL CASH INCENTIVE
| Individual Performance for Ms. Aslaksen | | üManaged all regulatory and litigation matters impacting the Company and oversaw legal work associated with insurance policy recovery efforts from Hurricane Ian and the Maui wildfires üDeveloped a new Generative AI Policy for the Company to mitigate risks associated with generative AI and to support employee productivity through the use of generative AI üSuccessfully led ESG-focused stockholder engagement with governance teams at the Company’s largest investors on issues important to stockholders; led legal aspects for the Company’s investor day, including review of all presentations and materials; provided stockholders with enhanced transparency into our business, insight on ESG initiatives and practices, and our approach to compensation üOversaw legal support for development projects and capital expenditure projects, including the negotiation of hotel management agreement amendments for the six Hyatt Transformational Capital Program assets; oversaw negotiations on the residential development at Four Seasons Orlando Resort at Walt Disney World® Resort; guided legal aspects of on-going structural resiliency reviews at the Company’s properties üLed legal department strategy development for Noble integration and advised broader team on complex legal requirements and integration matters üOversaw legal aspects of $110 million sale of The Camby including seller financing and 1031 like-kind-exchange with the Four Seasons Jackson Hole acquisition; led favorable negotiations on the repayment of loans to the buyers of the Sheraton Boston and New York properties üOversaw legal work on multiple acquisition opportunities and ground lease modification opportunities | | Individual Performance for Mr. Lentz | | üLed successful completion under budget of final six hotels in the 24-asset transformational capital program; these hotels are meaningfully outperforming expectations and are positioned to increase their market share üLed successful completion under budget of over 140 Company-managed capital expenditure projects with a total investment of $610 million; oversaw technical specification, design and completion under budget of over 1,000 hotel operations projects totaling $92 million, with an aggregate savings of $6.3 million üOversaw successful completion of hurricane restoration efforts and re-opening of the Ritz Carlton Naples Resort in July 2023, along with the completion of the Vanderbilt tower addition; accelerated planned future capital expenditure replacements at the property to mitigate future disruption and implemented enhanced resiliency investments to help mitigate future damage due to storms üSuccessfully led final entitlements and approvals enabling start of construction on value enhancement development projects at the Don Cesar, Phoenician and the Four Seasons Orlando Resort at Walt Disney World® Resort üProvided executive leadership and oversight of the Company’s Corporate Responsibility program and investments in ESG initiatives; led the development of the Company’s 2030 environmental and social targets and participated in cross-functional senior leadership team to engage with ESG teams at the Company’s key investors; increased engagement with the Company’s supply chain on ESG matters through site visits, industry and association events, and updated Excellence survey; established two new supplier-related goals for 2030; in 2023 achieved LEED certification at six properties and approved an additional 3 projects into the LEED pipeline üContinued to pilot new technologies at hotels and oversaw asset-level technology inventory process to refine long-term capital planning for systems and technology investments |
ANNUAL CASH INCENTIVE
Summary of Annual Cash Incentive: Based on the Committee’s review and determinations discussed above, the named executive officers received the following annual cash incentive for 2023:
ANNUAL CASH INCENTIVE
| | | | Results 2023 Annual Incentive | | | | | | Name | Target as % of Salary | Target Annual Incentive | Capex Cash Flow | ROIC | Individual Performance | Total Annual Incentive (1) | % of Target Achieved | | Mr. Risoleo | 170 | $1,785,000 | $1,999,200 | $798,177 | $714,000 | $3,511,400 | 197 | | Mr. Ghosh | 100 | 600,000 | 672,000 | 268,295 | 240,000 | 1,180,300 | 197 | | Mr. Tyrrell | 100 | 600,000 | 672,000 | 268,295 | 180,000 | 1,120,300 | 187 | | Ms. Aslaksen | 100 | 510,000 | 571,200 | 228,051 | 153,000 | 952,300 | 187 | | Mr. Lentz | 100 | 500,000 | 560,000 | 223,579 | 200,000 | 983,600 | 197 |
ANNUAL CASH INCENTIVE
(1)Total annual incentive amounts are rounded up to the nearest $100.
LONG-TERM INCENTIVES
LONG-TERM INCENTIVES The long-term incentives are equity-based awards and are denominated in performance-based and time-based restricted stock units. These awards represent the largest component of total target direct compensation for all named executive officers, representing between 52% and 74% in 2023. Dividends accrue on unvested awards, but are paid only when, and if, the restrictions on the awards lapse.
LONG-TERM INCENTIVES
| The majority of our long-term incentive compensation is performance-based. Performance-based restricted stock units are eligible to vest after three years upon achievement of relative TSR and Company Adjusted EBITDAre goals. These measures provide a link to stockholder value creation, with recognition of the other companies against which Host may be competing for capital. |
LONG-TERM INCENTIVES
Under the 2023 compensation program, awards of restricted stock units are eligible to vest based on the following: uPerformance-Based (60% of the target long-term incentive opportunity) restricted stock units that vest at the end of a three-year period ▪Adjusted EBITDAre Performance (half of the target performance-based opportunity) restricted stock units that vest at the end of a three-year period based on achievement of a key measure of operating performance, with targets set and measured annually at the beginning of each year for 2023, 2024, and 2025; ▪Relative TSR (half of the target performance-based opportunity) restricted stock units that vest based on the Company’s three-year performance (2023-2025) compared to the performance of the NAREIT Lodging & Resorts Index; and uTime-based (40% of the target long-term incentive opportunity) restricted stock units that vest ratably over a three-year period. The vesting of the restricted stock units is summarized below: The Culture and Compensation Committee believes the performance orientation and rigor of the 2023 long-term incentive program emphasizes long-term value creation and aligns executive team compensation with Company performance and stockholder outcomes over the long-term. Adjusted EBITDAre targets are established annually by the Committee at the beginning of each year. While the targets are set and measured annually, the 2023 awards vest only in 2026 based on actual performance achieved for each year. For more information on the Adjusted EBITDAre measure and a reconciliation to the applicable GAAP measure, see the Company’s Annual Report on Form 10-K in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.” on page 73. Achievement levels for Adjusted EBITDAre and the relative TSR measure are set for threshold, at which 25% of shares may be earned, target, at which 50% of the shares may be earned and high performance, at which all shares are earned. The threshold, target, and high levels of relative three-year TSR performance are the 30th, 50th, and 75th percentiles, respectively. The threshold, target and high goals for Adjusted EBITDAre for 2023 are set forth in the “2023 Results on Adjusted EBITDAre Measure” section below. No shares are earned if performance is below threshold, and results will be interpolated between the levels of threshold, target and high. Relative TSR performance-based restricted stock units are based on three year Company performance as compared to the NAREIT Lodging & Resorts Index. Set forth in the table below are the target levels established by the Committee for each of the named executive officers under the long-term incentive program for 2023 as well as a summary of the target levels of restricted stock units for each component of the program.
LONG-TERM INCENTIVES
| Name | Target Long-Term Incentive ($)(1) | 3-Year Time Based Units (#) | 3-Year Relative TSR Units 2023 - 2025 (Target) (#) | 3-Year Adjusted EBITDAre Units 2023 - 2025 (Target) (#) | Total Restricted Stock Units (Target) (#) | | Mr. Risoleo | $8,250,000 | 191,760 | 143,820 | 143,820 | 479,400 | | Mr. Ghosh | 1,800,000 | 41,839 | 31,379 | 31,379 | 104,597 | | Mr. Tyrrell | 2,000,000 | 46,487 | 34,865 | 34,865 | 116,217 | | Ms. Aslaksen | 1,100,000 | 25,568 | 19,176 | 19,176 | 63,920 | | Mr. Lentz | 1,100,000 | 25,568 | 19,176 | 19,176 | 63,920 |
LONG-TERM INCENTIVES
(1)This column reflects the target level dollar value of long-term incentives. These are equity-based awards. The Culture and Compensation Committee determines the dollar value that should be awarded and the number of shares of restricted stock units underlying the award is then determined by dividing the value by the average of the closing prices of the Company’s common stock on The Nasdaq Stock Market for the 60 calendar days up to and including December 31, 2022, which was $17.21. The Committee believes that an average price over a period of time is a better gauge of value as it mitigates the volatility of using single day stock prices. 2023 Results on Adjusted EBITDAre Measure: The threshold, target and high goals for Adjusted EBITDAre were established in February 2023 by the Culture and Compensation Committee. The goals were based on the Company’s 2023 business plan and budget, both of which were approved by the Board of Directors. As in prior years, the Company’s budget was established through a rigorous hotel-by-hotel analysis and reflected industry consensus expectations as well as budget expectations of our hotel operators for each hotel. One adjustment the Committee made in establishing the Adjusted EBITDAre goals was to remove the hotel results of The Ritz Carlton, Naples, including potential insurance business interruption proceeds. That hotel sustained significant damage from Hurricane Ian in September 2022 due to storm surge, which breached the beach dune and flooded the lowest level of the hotel. At the time the goals were established in February 2023, the hotel remained closed and there was significant uncertainty as to the re-opening date and expected hotel results for 2023 that made establishing targets including the hotel's performance impractical. The hotel remained closed until July 2023. Despite the removal of The Ritz Carlton, Naples from the Adjusted EBITDAre goals for compensation purposes, the high performance level established for 2023 was significantly higher than 2022 actual performance. 2022 Adjusted EBITDAre was $1,498 million (including The Ritz Carlton, Naples), and the high performance goal for 2023 was set at $1,610 million (excluding The Ritz Carlton, Naples). The 2023 target performance goal was also higher than 2022 actual performance after excluding the results of The Ritz Carlton, Naples from both years. Further, this result and the design of the plan whereby performance goals are set at the beginning of the year for each of the three years, led to the Committee approving significantly higher goals in 2023 than would have likely been the case if the 2023 goals were set in prior years. The Company was able to deliver strong operational improvements in 2023 driven by rate increases and occupancy growth at our hotels and successful capital allocation efforts as discussed in the 2023 Company Performance Highlights at the beginning of this CD&A. In addition, and similar to 2022, the Company continued to leverage its enterprise analytics and asset management teams to review operating costs with a focus on modernizing brand standards, streamlining departments, accelerating the adoption of cost-saving technology, and securing changes to the hotel operating model to achieve cost savings. As a result, the Company had strong financial performance in 2023, resulting in “above target” achievement against the Adjusted EBITDAre goals.
(in millions)
(1) The goals and actual results shown reflect the removal of The Ritz Carlton, Naples results for purposes of the Adjusted EBITDAre goals. 2023 actual Adjusted EBITDAre as reported in the Company's Annual Report on Form 10-K was $1,629 million. The equity awards granted in 2023 will vest in 2026 based on the Company’s Adjusted EBITDAre performance over the three-year period of 2023 to 2025, and therefore none of the awards were eligible to vest in 2023. Awards Eligible to Vest Based on Adjusted EBITDAre for 2023: The restricted units eligible to vest for 2023 Adjusted EBITDAre performance reflect restricted stock unit awards that were granted in 2021. As we have previously disclosed, the design of our 2021 long-term incentive program included several changes that the Committee approved in response to feedback from our stockholders. This included moving the performance-based portion of the program to three-year cliff vesting and assessing performance solely through quantitative financial metrics. As a result, the 2021 performance-based awards were considered transitional - while the bulk of the award cliff vested in 2024 based on 2021-2023 Adjusted EBITDAre performance, a smaller amount vested annually for performance in each of 2021, 2022, and 2023. This was intended to provide a level of vesting opportunity in each year and avoid the decrease in vesting opportunity that would have resulted in an immediate switch from one-year vesting under the prior plan design to three-year cliff vesting under the current design. As disclosed in our prior years' proxy statements, the actual Adjusted EBITDAre results from 2021 and 2022 together with the 2023 results discussed above, ultimately led to the restricted stock units being earned between the "target" and "high" levels. Additionally, the portion of the award that cliff vested in 2024 based on 2021-2023 Adjusted EBITDAre performance was subject to a 20% increase or decrease based on the Company’s highest average 20-day stock price during 2023 as compared to threshold, target and high goals established by the Committee in February 2021. For purposes of establishing the goals for this stock price modifier, the average stock price of the first 60 trading days of 2020 of $15.23 was established as “target,” and the “threshold” and “high” values were established at -10% ($13.71) and +10% ($16.75), respectively. Under this stock price modifier, if the highest average stock price is: (i) at threshold or lower, then the number of units vesting is reduced by 20% of target shares; (ii) at target, then there is no change to the number of units vesting; or (iii) at high, then the number of units vesting is increased by 20% of target shares. Results are interpolated between these performance levels. Because the Company achieved a 20 trading day average stock price of $18.77 in 2023, the stock price modifier metric was achieved at the "high" level and the portion of the award to each executive officer subject to the stock price modifier was increased by 20% of target shares, which adjustment is reflected in the number of restricted stock units shown in the table below. The chart below shows, for each named executive officer, the total number of restricted stock units granted in 2021 that were eligible to be earned based on Adjusted EBITDAre performance for 2023 as well as those restricted stock units granted in 2021 that were eligible to be earned based on average Adjusted EBITDAre performance for 2021-2023, the target level of such restricted stock units, the actual number of such restricted stock units earned, and the number of such restricted stock units forfeited by each named executive officer. For a more detailed breakdown of the awards granted for each component of the program in 2021, please see our 2022 proxy statement.
(in millions)
| | Adjusted EBITDAre Restricted Stock Units | | | | | Name | Restricted Stock Units Granted (High) | Restricted Stock Units (Target) | Restricted Stock Units Earned | Restricted Stock Units Forfeited | | Mr. Risoleo | 608,041 | 304,021 | 567,890 | 40,151 | | Mr. Ghosh | 125,206 | 62,603 | 117,484 | 7,722 | | Mr. Tyrrell | 175,864 | 87,932 | 164,251 | 11,613 | | Ms. Aslaksen | 94,063 | 47,032 | 88,088 | 5,975 | | Mr. Lentz | 64,762 | 32,381 | 60,554 | 4,208 |
(in millions)
2023 Results on Relative TSR Measure: The equity awards granted in 2023 will vest based on the Company’s relative TSR performance over the three-year period of 2023 to 2025 and therefore none of the awards were eligible to vest in 2023. The restricted stock units eligible to vest for 2023 reflect performance-based restricted stock unit awards that were granted in 2021 and which were eligible to vest based on the Company’s relative TSR (measured as a percentile) compared to the NAREIT Lodging & Resorts Index for the period January 1, 2021 through December 31, 2023. No restricted stock units are earned if performance is below threshold. The number of restricted stock units earned for the relative TSR portion of the long-term incentive program was at the high level based on the Company’s strong relative TSR performance over the period. As noted in the 2023 Performance Highlights at the beginning of this CD&A, we returned over $700 million of capital to stockholders by increasing our dividend each quarter, bringing the total dividends declared for the year to $0.90 per share. (1)TSR is the increase in the price of the Company’s common stock at year-end December 2023 over the price at year-end December 2020, plus dividends paid on the Company’s common stock during each year. The stock price will be calculated, in each case, as the average of the closing price of the Company’s common stock on The Nasdaq Stock Market on the last 60 calendar days of the year. The chart below shows for each named executive officer, the actual number of restricted stock units that were eligible to vest based on the Company’s relative TSR over the three-year period of 2021 to 2023 and the number of restricted stock units earned and forfeited. All restricted stock units vested for each of the named executive officers based on the Company’s high performance on relative TSR.
(in millions)
| | 2021 - 2023 TSR-Based Restricted Stock Units | | | | | Name | Restricted Stock Units Granted (High) | Restricted Stock Units Granted (Target) | Restricted Stock Units Earned | Restricted Stock Units Forfeited | | Mr. Risoleo | 280,634 | 140,317 | 280,634 | — | | Mr. Ghosh | 43,174 | 21,587 | 43,174 | — | | Mr. Tyrrell | 81,168 | 40,584 | 81,168 | — | | Ms. Aslaksen | 37,130 | 18,565 | 37,130 | — | | Mr. Lentz | 28,064 | 14,032 | 28,064 | — |
(in millions)
Summary of Performance-Based Restricted Stock Units Results: The chart below summarizes the number of performance-based restricted stock units that were eligible to vest for 2023 and the number of performance-based restricted stock units earned and forfeited by the named executive officers for 2023. The total number of performance-based restricted stock units earned exceeded target for 2023 due to the Company’s strong results on Adjusted EBITDAre (exceeded target performance) and relative TSR (high performance). As discussed above, the awards eligible to vest were granted in 2021. In establishing the number of restricted stock units granted to each named executive officer, the Culture and Compensation Committee determined the dollar value that should be awarded for each executive officer. The number of restricted stock units underlying the award was then determined by dividing the values by the average of the closing prices of the Company's common stock for the 60 calendar days up to and including December 31, 2020, which was $13.90. The Company's strong performance between 2021 and 2023 led to high relative TSR performance and an appreciation in the Company's stock price (which was $19.47 as of December 29, 2023). As a result, the Committee feels that the final payouts are reflective of the long-term incentive program functioning as designed, by incentivizing and promoting long-term value creation during this period for the benefit of stockholders.
(in millions)
| Name | Total Restricted Stock Units Eligible to Vest For 2023 | Total Restricted Stock Units Earned For 2023 | Total Restricted Stock Units Forfeited For 2023 | | Mr. Risoleo | 888,675 | 848,524 | 40,151 | | Mr. Ghosh | 168,380 | 160,658 | 7,722 | | Mr. Tyrrell | 257,032 | 245,419 | 11,613 | | Ms. Aslaksen | 131,193 | 125,218 | 5,975 | | Mr. Lentz | 92,826 | 88,618 | 4,208 |
Role of the Culture and Compensation Committee, Market Data and Peer Group
Role of the Culture and Compensation Committee, Market Data and Peer Group The Culture and Compensation Committee reviews compensation levels, trends and practices every year and has retained an independent compensation consultant, Pay Governance, as discussed in more detail below, to assist in its review. In addition to a review of program design, the Committee annually reviews and approves total target direct compensation for senior executives. Data from three sources was approved by the Committee for use in generally assessing and comparing pay levels at the Company and for setting target compensation for 2023. These were (1) pay data reported in 2022 proxy filings for peer companies, (2) 2022 general industry survey data of companies for non-real estate specific functions, size adjusted based on revenues, and (3) 2022 McLagan survey data focused on companies of similar size in terms of total capitalization. The peer group is reviewed on a regular basis and is generally comprised of 15-25 companies, which is a sufficient number to provide robust market data and minimize year-over-year changes to the extent possible. The peer group companies primarily operate in the real estate and/or hospitality industry and with North American operations or a similar business model to that of the Company. The companies are generally our competitors for talent and/or investment capital. They are screened as to size and generally fall within a range of a market capitalization that is 0.25 times to 3 times that of the Company or with revenues in the range of 0.25 times to 2 times that of the Company. For 2023 compensation decisions, the Committee continued to use the same peer group as in the prior year except for the removal of The Macerich Company which was at the low end of the financial criteria. The compensation peer group consisted of the following 18 companies:
Role of the Culture and Compensation Committee, Market Data and Peer Group
| COMPENSATION PEER GROUP | | | AvalonBay Communities, Inc. | Kimco Realty Corporation | | Boston Properties, Inc. | Marriott International, Inc. | | Duke Realty Corporation (later acquired by Prologis) | Park Hotels & Resorts, Inc. | | Equity Residential | Regency Centers | | Essex Property Trust, Inc. | SL Green Realty Corp. | | Federal Realty Investment Trust | UDR, Inc. | | Healthpeak Properties, Inc. | Ventas, Inc. | | Hilton Worldwide Holdings, Inc. | Vornado Realty Trust | | Hyatt Hotels Corporation | Welltower, Inc. |
Role of the Culture and Compensation Committee, Market Data and Peer Group
The McLagan survey data provided the Committee with industry specific references for a broad range of companies. It also reflected companies against which the Company competes directly for talent and investment capital. The general industry database presented information from a broader market than the real estate industry and is consistent with the Company’s inclusion in the S&P 500 Index. The Committee generally compared the compensation of each executive to multiple percentiles of each data source. In addition, the Committee took into consideration the characteristics of each executive’s position, scope of responsibilities, experience, performance and internal equity. The Committee relies on this range of competitive information, rather than a targeted reference point to inform its establishment of compensation levels. Pay for an executive officer who is new to a position tended to be at the lower end of the competitive range, while pay for seasoned executives would tend to be positioned at the higher end of the competitive range.
Role of the Compensation Consultant
Role of the Compensation Consultant Pursuant to its charter, the Culture and Compensation Committee is authorized to engage, retain and terminate any consultant, as well as approve the consultant’s fees, scope of work and other terms of retention. Starting in 2010, the Committee retained Pay Governance LLC as its advisor. Pay Governance advises and consults with the Committee on compensation issues, compensation design and trends, and keeps the Committee apprised of regulatory, legislative, and accounting developments and competitive practices related to executive compensation. Pay Governance assists the Committee in the design, structure and implementation of the current executive compensation program. It also reviews, at the direction of the Committee, compensation levels, trends and practices at least annually. Pay Governance does not determine the exact amount or form of executive compensation for any executive officers. Pay Governance reports directly to the Committee and representatives of Pay Governance, when requested, attend meetings of the Committee, are available to participate in executive sessions and communicate directly with the Committee Chair or its members outside of meetings. Pay Governance has also served as a consultant retained by the Nominating, Governance and Corporate Responsibility Committee to assist the Committee with its review of the compensation of independent directors. Pay Governance is retained by and conducts its work at the direction and request of the Board committees. It is not retained by, and does no work directly for, the Company. In compliance with the disclosure requirements of the SEC regarding the independence of compensation consultants, Pay Governance addressed each of the six independence factors established by the SEC with the Culture and Compensation Committee. Its responses affirmed the independence of Pay Governance on executive compensation matters. Based on this assessment, the Committee determined that the engagement of Pay Governance does not raise any conflicts of interest or similar concerns. The Committee also evaluated the independence of other outside advisors to the Committee, including outside legal counsel, considering the same independence factors and concluded that their work for the Committee does not raise any conflicts of interest. The Culture and Compensation Committee may delegate any or all of its responsibilities to a subcommittee but did not do so in 2023. The Committee’s Report on Executive Compensation appears later in this proxy statement.
SEVERANCE PLAN
SEVERANCE PLAN The Company has a severance plan that has been in effect since 2003 and applies to employees at the level of senior vice president and above. The Culture and Compensation Committee believes that a severance plan allows the Company to provide properly designed severance benefits on a consistent basis, which promotes stability and continuity of senior management. As part of the annual executive compensation review process, the Committee reviews the key terms of the severance plan with its Compensation Consultant. The provision of severance upon a change-in-control aligns the Company’s interests with its stockholders by eliminating distractions that arise with the uncertainty of these transactions and avoiding the loss of key members of management during a critical period. The severance plan requires a “double trigger” for payment in the context of a change-in-control, that is, there must be both a change in control and a termination by the Company without “cause” or by the executive for “good reason” in the period beginning 30 days prior to the change in control and ending one year after the change-in-control. The severance plan does not provide for tax gross-ups on any payments made in connection with a termination or a change in control. The cost of any excise tax that a member of senior management might incur related to a payment under the plan would be borne by the individual. In addition, prior to its annual compensation determinations, the Committee reviews the level of severance pay and benefits that the named executive officers would receive under the plan and under equity award agreements. Under the restricted stock unit agreements, a change in control coupled with a triggering event would result in the acceleration and vesting of all long-term incentive awards. For additional information regarding the severance plan, including an estimate of payments the named executive officers would have been entitled to receive on December 31, 2023 upon various termination events, see “Executive Officer Compensation—Severance, Retirement and Change in Control Payments.”
Summary Compensation Table for Fiscal Year 2023
Summary Compensation Table for Fiscal Year 2023
Summary Compensation Table for Fiscal Year 2023
| Name | Year | Salary (1) | Stock Awards (2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total | | Richard E. Marriott (*) Chairman of the Board | 2023 | $396,777 | — | $525,900 | $65,106 | $987,783 | | | 2022 | 396,777 | — | 382,400 | 70,334 | 849,511 | | | 2021 | 396,777 | — | 482,400 | 41,270 | 920,447 | | James F. Risoleo President and Chief Executive Officer | 2023 | 1,050,000 | $12,746,827 | 3,511,400 | 386,359 | 17,694,586 | | | 2022 | 1,050,000 | 10,291,269 | 2,650,400 | 482,815 | 14,474,484 | | | 2021 | 1,000,000 | 7,370,377 | 2,913,300 | 237,053 | 11,520,730 | | Sourav Ghosh Executive Vice President, Chief Financial Officer | 2023 | 600,000 | 2,750,354 | 1,180,300 | 218,796 | 4,749,450 | | | 2022 | 600,000 | 2,410,527 | 830,900 | 157,866 | 3,999,293 | | | 2021 | 500,000 | 1,219,533 | 910,400 | 96,442 | 2,726,375 | | Nathan S. Tyrrell Executive Vice President, Chief Investment Officer | 2023 | 600,000 | 3,278,861 | 1,120,300 | 211,229 | 5,210,390 | | | 2022 | 600,000 | 2,876,155 | 830,900 | 181,879 | 4,488,934 | | | 2021 | 576,800 | 2,131,747 | 1,050,300 | 107,708 | 3,866,555 | | Julie P. Aslaksen Executive Vice President, General Counsel and Secretary | 2023 | 510,000 | 1,764,861 | 952,300 | 73,581 | 3,300,742 | | | 2022 | 500,000 | 1,454,595 | 692,400 | 69,370 | 2,716,365 | | | 2021 | 420,000 | 1,011,973 | 764,800 | 75,459 | 2,272,232 | | Michael E. Lentz Executive Vice President, Development, Design & Construction | 2023 | 500,000 | 1,606,462 | 983,600 | 157,503 | 3,247,565 | | | 2022 | 500,000 | 1,276,989 | 742,400 | 190,896 | 2,710,286 |
Summary Compensation Table for Fiscal Year 2023
*Mr. Marriott is not a named executive officer under the SEC rules, but summary compensation information is provided in the interest of full disclosure. (1)Salary. Salary is established at an annual rate, determined on the basis of a 52-week year, and is paid bi-weekly. The amount listed in the salary column includes amounts deferred at the election of the named executive officer under our Executive Deferred Compensation Plan in any such year. (2)Stock Awards. The amounts in this column reflect the aggregate grant date fair value of restricted stock unit awards calculated in accordance with FASB ASC Topic 718, based upon the probable outcome of the performance conditions as of the grant date for performance-based awards, excluding the effect of estimated forfeitures, which is the methodology that the Company uses to expense the awards for accounting purposes. The Culture and Compensation Committee makes its assessments on the appropriate share amounts for restricted stock unit awards using a 60 calendar day average of the closing stock prices of the Company's common stock in order to mitigate the effects of volatility. Differences between grant date stock price value and the 60-day average price will result in differing valuations. For that reason, the 2023 target compensation values discussed previously in the Compensation Discussion and Analysis (CD&A) section may be higher or lower than the grant date fair value of the award for accounting purposes and as reflected on the Summary Compensation Table above. The CD&A explains the conditions for vesting of the restricted stock units, which for 2023 are: (i) the Company’s performance against annual Adjusted EBITDAre goals, which vests at the end of a three-year period, (ii) the results of the Company’s total stockholder return compared against the NAREIT Lodging & Resorts Index over a three-year performance period, and (iii) time-based, with restricted stock units vesting over a three-year period in substantially equal installments. The values included in the table for 2023 reflect the full value of the 2023 awards with time-based vesting or vesting based on three-year total stockholder return, but only the portion of the awards that vest based on Adjusted EBITDAre that are tied to 2023 performance, because annual performance goals for this metric are set at the beginning of the applicable year. Since future year targets were not set as of December 31, 2023, there was no grant date fair value for accounting purposes for those portions of the award that vest based on Adjusted EBITDAre performance for 2024 and 2025. Similarly, the amounts shown in the table for 2023 also include the portion of the restricted stock units granted in 2021 and 2022 that vest based on 2023 Adjusted EBITDAre performance, which performance goals were set at the beginning of 2023. Assuming the highest level of performance is achieved and all restricted stock units vest, the fair value of the 2023 restricted stock unit awards calculated in accordance with FASB ASC Topic 718 would be as follows: Mr. Risoleo, $15,513,819; Mr. Ghosh, $3,312,790; Mr. Tyrrell, $4,030,470; Ms. Aslaksen, $2,147,584; and Mr. Lentz, $1,932,866. These amounts reflect the maximum value of the time- based and three-year total stockholder return vesting portions and the maximum value of the tranches of the restricted stock units granted in 2021, 2022, and 2023 that vest based on 2023 Adjusted EBITDAre performance. For information on the assumptions and methodology used in calculating the grant date fair values based on the probability of achievement at target as reflected in the table, see “Note 9—Employee Stock Plans—Senior Executive Plan” in the Notes to Consolidated Financial Statements in our 2023 Annual Report on Form 10-K. (3)Non-Equity Incentive Plan Compensation. These amounts reflect the annual cash incentive awards paid to each named executive officer or deferred under the Executive Deferred Compensation Plan. (4)All Other Compensation. All Other Compensation consists of the following amounts: uMatching contributions of $11,250 made under the Retirement and Savings Plan (401(k) Plan) to each of Mr. Marriott, Mr. Risoleo, Mr. Ghosh, Mr. Tyrrell, Ms. Aslaksen, and Mr. Lentz. uDiscretionary matching contributions of $11,250 made under the Retirement and Savings Plan to each of Mr. Marriott, Mr. Risoleo, Mr. Ghosh, Mr. Tyrrell, Ms. Aslaksen, and Mr. Lentz. uMatching contributions made under the Executive Deferred Compensation Plan as follows: Mr. Marriott, $19,917; Mr. Risoleo, $136,766; Mr. Ghosh, $45,986; Mr. Tyrrell, $45,986; and Mr. Lentz, $38,446. uDiscretionary matching contributions made under the Executive Deferred Compensation Plan as follows: Mr. Marriott, $19,917; Mr. Risoleo, $136,766; Mr. Ghosh, $45,986; Mr. Tyrrell, $45,986; and Mr. Lentz, $38,446. uPerquisites and other personal benefits provided to Mr. Risoleo in 2023 equaled $52,497, which includes dining and complimentary rooms and other hotel services when on personal travel at hotels owned by us or managed by our major operators, financial planning and tax services, commuting expenses, a club membership to facilitate business events and meetings, and spousal travel for business events. Perquisites and other personal benefits provided to other named executive officers in 2023 included dining and complimentary rooms and other hotel services when on personal travel at hotels owned by us or managed by our major operators, financial planning and tax services, and spousal travel for business events. The amounts were as follows: Mr. Ghosh, $53,935 (of which dining, rooms and hotel services totaled $52,935); Mr. Tyrrell, $48,282 (all of which consisted of dining, rooms and other hotel services); Ms. Aslaksen, $28,044 (of which dining, rooms and hotel services totaled $26,044); and Mr. Lentz $30,043 (of which dining, rooms and other hotel services totaled $29,043). For 2023, there were no reportable perquisites or other personal benefits provided to Mr. Marriott. uTax reimbursements associated with the 2023 perquisites and other personal benefits as follows: Mr. Marriott, $2,772; Mr. Risoleo, $37,830; Mr. Ghosh, $50,388; Mr. Tyrrell, $48,475; Ms. Aslaksen, $23,038; and Mr. Lentz, $28,068.
Grants of Plan-Based Awards in Fiscal Year 2023
Grants of Plan-Based Awards in Fiscal Year 2023 The following table provides information about the possible payments under our annual cash incentive award in 2023 and the awards of restricted stock units in 2023.
Grants of Plan-Based Awards in Fiscal Year 2023
| Name | Grant Date | Estimated Possible Payments Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payments Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards(3) # | Full Grant Date Fair Value (4) | | | | Threshold $ | Target $ | Maximum $ | Threshold # | Target # | Maximum # | | | | Richard E. Marriott | 8-Feb-23 | $148,791 | $297,583 | $595,166 | | | | | | | James F. Risoleo | 8-Feb-23 | 892,500 | 1,785,000 | 3,570,000 | | | | | | | | 8-Feb-23 | | | | 179,594 | 359,187 | 718,374 | | $9,189,679 | | | 8-Feb-23 | | | | | | | 191,760 | 3,557,148 | | Sourav Ghosh | 8-Feb-23 | 300,000 | 600,000 | 1,200,000 | | | | | | | | 8-Feb-23 | | | | 38,213 | 76,426 | 152,852 | | 1,974,241 | | | 8-Feb-23 | | | | | | | 41,839 | 776,113 | | Nathan S. Tyrrell | 8-Feb-23 | 300,000 | 600,000 | 1,200,000 | | | | | | | | 8-Feb-23 | | | | 47,171 | 94,341 | 188,682 | | 2,416,527 | | | 8-Feb-23 | | | | | | | 46,487 | 862,334 | | Julie P. Aslaksen | 8-Feb-23 | 255,000 | 510,000 | 1,020,000 | | | | | | | | 8-Feb-23 | | | | 25,012 | 50,023 | 100,046 | | 1,290,574 | | | 8-Feb-23 | | | | | | | 25,568 | 474,286 | | Michael E. Lentz | 8-Feb-23 | 250,000 | 500,000 | 1,000,000 | | | | | | | | 8-Feb-23 | | | | 22,118 | 44,236 | 88,472 | | 1,132,176 | | | 8-Feb-23 | | | | | | | 25,568 | 474,286 |
Grants of Plan-Based Awards in Fiscal Year 2023
(1)As described under “Annual Cash Incentive” in the CD&A, these are amounts that may be earned based on the performance of the Company in achieving one-year performance goals based on capital expenditure cash flow and return on invested capital, and on the personal performance by each executive towards achieving the Company’s annual business plan as approved by the Culture and Compensation Committee. The actual amounts earned by the named executive officers in 2023 are reflected in the Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation” and are described in the CD&A under “2023 Compensation Results—Annual Cash Incentive.” (2)Under our 2023 compensation program, senior management received a restricted stock unit award on February 8, 2023, which was eligible to vest subject to performance conditions. The performance conditions of the restricted stock units under our 2023 compensation program are (i) the Company’s performance against Adjusted EBITDAre goals for 2023 which will vest in 2026, and (ii) the results of the Company’s annual total stockholder return compared against the NAREIT Lodging & Resorts Index over a forward-looking three-year performance period. Dividends accrue on the restricted stock units but are not paid unless the restricted stock units vest. The amounts shown in the table also include the portion of the restricted stock units under our 2022 and 2021 compensation programs that are earned based on 2023 Adjusted EBITDAre performance goals set at the beginning of 2023 and vest in 2025 and 2024. See the Outstanding Equity Awards at 2023 Fiscal Year End table below for additional information on these awards. (3)Under our 2023 compensation program, senior management received a time-based restricted stock unit award on February 8, 2023 with restricted stock units vesting annually over a three-year period measured from the grant date in substantially equal installments, provided the executive remains employed by the Company at the time of vesting. The full number of restricted stock units that could vest during the three-year period is shown, even though the executive will not fully vest in these units until the third anniversary of the grant date. (4)The amounts reflect the grant date fair value of restricted stock unit awards calculated in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. See “Note 9—Employee Stock Plans—Senior Executive Plan” in the Notes to Consolidated Financial Statements in our 2023 Annual Report on Form 10-K for information on the assumptions and methodology used in calculating the grant date fair values.
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following table summarizes all the equity awards made to the named executive officers that were outstanding as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year End
| Name | Grant Date | OPTION AWARDS(1) | | | | STOCK AWARDS | | | | | | | Number of Shares Underlying Unexercised Options Exercisable # | Number of Shares Underlying Unexercised Options Unexercisable # | Option Exercise Price $ | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (2) # | Market Value of Shares or Units of Stock that have not Vested (2) $ | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have not Vested (3) # | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested (4) $ | | James F. Risoleo | 15-Jan-15 | 10,543 | | $23.76 | 15-Jan-25 | | | | | | | 15-Apr-15 | 4,128 | | 19.93 | 15-Apr-25 | | | | | | | 4-Feb-16 | 28,136 | | 14.20 | 4-Feb-26 | | | | | | | 4-Feb-21 | | | | | 62,363 | $1,214,208 | 888,675 | $17,302,502 | | | 9-Feb-22 | | | | | 113,869 | 2,217,029 | 448,357 | 8,729,511 | | | 8-Feb-23 | | | | | 191,760 | 3,733,567 | 431,460 | 8,400,526 | | Sourav Ghosh | 17-Feb-15 | 851 | | 23.56 | 17-Feb-25 | | | | | | | 15-Jul-15 | 1,762 | | 21.09 | 15-Jul-25 | | | | | | | 4-Feb-21 | | | | | 9,595 | 186,815 | 168,380 | 3,278,359 | | | 9-Feb-22 | | | | | 28,271 | 550,436 | 111,317 | 2,167,342 | | | 8-Feb-23 | | | | | 41,839 | 814,605 | 94,136 | 1,832,828 | | Nathan S. Tyrrell | 15-Jan-15 | 6,069 | | 23.76 | 15-Jan-25 | | | | | | | 15-Apr-15 | 817 | | 19.93 | 15-Apr-25 | | | | | | | 4-Feb-21 | | | | | 18,038 | 351,200 | 257,032 | 5,004,413 | | | 9-Feb-22 | | | | | 31,412 | 611,592 | 123,686 | 2,408,166 | | | 8-Feb-23 | | | | | 46,487 | 905,102 | 104,594 | 2,036,445 | | Julie P. Aslaksen | 4-Feb-21 | | | | | 8,251 | 160,647 | 131,193 | 2,554,328 | | | 9-Feb-22 | | | | | 15,706 | 305,796 | 61,841 | 1,204,044 | | | 8-Feb-23 | | | | | 25,568 | 497,809 | 57,528 | 1,120,070 | | Michael E. Lentz | 14-Mar-16 | 13,980 | | 16.87 | 14-Mar-26 | | | | | | | 4-Feb-21 | | | | | 6,237 | 121,434 | 92,826 | 1,807,322 | | | 9-Feb-22 | | | | | 14,921 | 290,512 | 58,751 | 1,143,882 | | | 8-Feb-23 | | | | | 25,568 | 497,809 | 57,528 | 1,120,070 |
Outstanding Equity Awards at 2023 Fiscal Year End
(1)All option awards are fully vested and have a 10-year life from the date of grant. The Company discontinued granting options after 2016. (2)These columns reflect the number and value of time-based restricted stock units awarded under our 2021, 2022 and 2023 compensation programs. The restricted stock units vest annually over a three-year period measured from the grant date in substantially equal installments provided the executive remains employed by the Company at the time of vesting. For the 2023 award, the full three-year number of restricted stock units is shown, even though the executive will not fully vest in these restricted stock units until February 8, 2026. For the 2022 award, the remaining two-thirds of the unvested award is shown. For the 2021 award, the remaining one-third of the unvested award is shown. The value is based on the closing price of our stock on December 29, 2023 of $19.47 multiplied by the number of restricted stock units. (3)The number of shares under this column includes restricted stock units awarded under our 2021, 2022 and 2023 compensation programs which are eligible to vest subject to the attainment of performance conditions. The 2021 award vests based on (i) performance against Adjusted EBITDAre goals for 2021, 2022 and 2023 (with a portion vesting annually following the end of each performance year and a second portion vesting in 2024, subject to a 20% increase or decrease based on stock price performance), and (ii) the results of the Company’s total stockholder return over a three-year performance period from 2021-2023. The 2022 award vests based on (i) performance against Adjusted EBITDAre goals for 2022, 2023 and 2024; while the goals are set annually, the award vests only in 2025, and (ii) the results of the Company’s total stockholder return over a three-year performance period from 2022-2024. The 2023 award vests based on (i) performance against Adjusted EBITDAre goals for 2023, 2024 and 2025; while the goals are set annually, the award vests only in 2026, and (ii) the results of the Company’s total stockholder return over a three-year performance period from 2023-2025. For all awards, the Company’s total stockholder return performance is compared against the NAREIT Lodging & Resorts Index over a three-year performance period. For the portions of the awards eligible to vest for 2023, the determination of whether and to what extent those measures were satisfied was made by the Culture and Compensation Committee in February 2024. The number of shares shown assumes maximum performance, except the restricted stock units eligible to vest based on performance against Adjusted EBITDAre goals for 2024 and 2025 are shown based on threshold performance. (4)The value is calculated based on the closing price of our stock on December 29, 2023 of $19.47 multiplied by the number of performance-based awards shown.
Option Exercises and Stock Vested in Fiscal Year 2023
Option Exercises and Stock Vested in Fiscal Year 2023 The chart below shows stock awards that vested and stock options exercised by the named executive officers during 2023. The performance-based restricted stock units shown vested in February 2023 based on performance for 2022 (for Adjusted EBITDAre performance) or performance for 2020-2022 (based on the Company’s total stockholder return). Restricted stock units which vested based on performance for 2023 did not vest until February 2024 when the Culture and Compensation Committee met and made its determinations on performance measures and are not included in the table below.
Option Exercises and Stock Vested in Fiscal Year 2023
| | OPTION AWARDS | | STOCK AWARDS | | | Name | NUMBER OF SHARES ACQUIRED ON EXERCISE # | VALUE REALIZED ON EXERCISE(2) | NUMBER OF SHARES ACQUIRED ON VESTING(1) # | VALUE REALIZED ON VESTING(2) | | James F. Risoleo | 11,668 | $2,334 | 652,531 | $12,100,611 | | Sourav Ghosh | — | — | 78,707 | 1,458,542 | | Nathan S. Tyrrell | — | — | 187,970 | 3,485,809 | | Julie P. Aslaksen | — | — | 86,655 | 1,606,910 | | Michael E. Lentz | — | — | 67,021 | 1,242,679 |
Option Exercises and Stock Vested in Fiscal Year 2023
(1)These are (i) performance-based awards that vested on February 14, 2023, the date that the Culture and Compensation Committee determined the results on performance measures for 2022, and (ii) time-based restricted stock units that vested during 2023. (2)For option awards, the value realized on exercise is calculated by multiplying (i) the number of shares exercised by (ii) the difference between the closing price of the Company’s common stock on the date of exercise and the exercise price of the option. For restricted stock units, the value realized on vesting is determined by multiplying the shares vested by the closing prices of the Company’s common stock on the applicable dates of vesting.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The Company has an Executive Deferred Compensation Plan in which the named officers participate. This is the only non-qualified retirement plan offered to senior executives. The Company does not have a pension plan and does not have a supplemental executive retirement program. The following table summarizes the named executive officers’ compensation under the Executive Deferred Compensation Plan as of December 31, 2023. The aggregate balance shown includes amounts earned through December 31, 2023 and voluntarily deferred.
Nonqualified Deferred Compensation
| Name | Executive Contributions in Last Fiscal Year | Company Contributions in Last Fiscal Year | Company Discretionary Contributions in Last Fiscal Year(1) | Aggregate Earnings in Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year-End (1) | | James F. Risoleo | $296,032 | $136,766 | $136,766 | $1,459,136 | — | $10,314,789 | | Sourav Ghosh | 114,472 | 45,986 | 45,986 | 100,393 | — | 797,580 | | Nathan S. Tyrrell | 114,472 | 45,986 | 45,986 | 287,423 | — | 1,856,876 | | Julie P. Aslaksen | — | — | — | 7,586 | — | 56,968 | | Michael E. Lentz | 134,240 | 38,446 | 38,446 | 80,836 | — | 647,906 |
Nonqualified Deferred Compensation
(1)Amounts reflect vested values as of December 31, 2023 for all named executive officers. Amounts shown in the “Aggregate Balance at Last Fiscal Year-End” column include the Company’s discretionary contributions for fiscal year 2023, even though such amounts were not deposited into the accounts under the Executive Deferred Compensation Plan until February 2024. Under the Executive Deferred Compensation Plan, participants may defer any portion of their base salary or any amounts awarded under the annual cash incentive award program. Participants direct their deferrals into investment funds, which are substantially the same funds available for investment under the 401(k) Plan. Participants’ accounts may or may not appreciate, and may depreciate, depending on the performance of their investment choices. The Company does not guarantee any returns and none of the investment choices provide interest at above-market rates. The Company matches $0.50 of each $1.00 deferred, up to a maximum of 8% of the participant’s compensation less the amount credited to the 401(k) Plan. The Company may provide an annual discretionary matching contribution of up to $0.50 on each $1.00 deferred up to 8% of the participant’s compensation. Participants fully vest in Company contributions after three years of continued employment. The vesting schedule is 33% vesting after one year; 66% vesting after two years; and 100% vesting after three years or more. All named executive officers who have contributed to the plan are fully vested. Company contributions are fully vested (100%) for distributions related to normal retirement, death, disability and change of control. The Executive Deferred Compensation Plan offers automatic lump sum distributions upon death or disability. The participant may elect to receive lump sum or installment distributions upon separation from service, or with respect to his or her deferrals only (but not Company contributions) on such other dates certain that a participant may elect. Such elections are made at the time the participant elects to defer compensation for a year. However, “key employee” distributions payable upon separation from service will be delayed for six months. Participants may also elect to receive a lump sum distribution of their account in the event of a change in control. Plan assets are held in a rabbi trust.
CEO Pay Ratio
CEO Pay Ratio
CEO Pay Ratio
| As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information regarding the relationship between the annual total compensation of our employees and the annual total compensation of Mr. Risoleo, our Chief Executive Officer. We consider the pay ratio specified herein to be a reasonable estimate, calculated in a manner intended to be consistent with Item 402(u) of Regulation S-K. | 70:1 CEO PAY RATIO |
CEO Pay Ratio
| The Company’s CEO pay ratio ranks within the lowest 10% among S&P 500 companies and is 2.6x lower than the median ratio for S&P 500 companies (185:1) |
CEO Pay Ratio
We believe executive pay must be internally consistent and equitable to motivate our employees to create stockholder value. We are committed to internal pay equity, and the Culture and Compensation Committee monitors the relationship between the pay our executive officers receive and the pay our employees receive. We recognize that our continued success is highly dependent upon the retention of experienced, motivated and loyal employees at all levels of our organization. We continually review our compensation practices to ensure that the compensation of every employee reflects the level of his or her position and responsibilities and is reviewed so as to be competitive to similar positions in the applicable labor market, while maintaining an appropriate balance between executive compensation and our overall compensation levels. By doing so, we maintain a highly qualified, stable workforce, which is reflected in the fact that the average tenure with the Company is 13 years. The compensation program for all employees is aligned with the structure of executive officer compensation. The primary components of compensation for both employees and executive officers include: base salary, annual cash incentive bonus, and long-term incentive equity-based compensation (which is granted to all employees at or above upper middle management). The same metrics (return on invested capital and capital expenditure cash flow) are the primary components for determining the annual cash incentive bonus for both employees and executive officers. There are, however, some differences in the design of the long-term incentive equity-based compensation. While the long-term equity incentive grants for both executive officers and upper middle management include a total stockholder return component and a component based on Company performance against Adjusted EBITDAre targets, the grants for upper middle management are also based in part on individual performance objectives. In contrast, the equity incentive grants for executive officers do not include individual performance objectives and are solely based on quantitative metrics. Our compensation and benefit programs are designed to encourage and reward all employees who contribute to our success. For more information on the Company’s compensation philosophy, see “Our Compensation Program” within the CD&A. Mr. Risoleo had 2023 annual total compensation of $17,694,586 as reflected in the Summary Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2023 was $251,653, as determined in the same manner as the total compensation for Mr. Risoleo. Based on this information, for 2023, the estimated ratio of the median of the annual total compensation of all of our employees (other than our CEO) to the annual compensation of our CEO was 1 to 70. To identify the median employee from our employee population, we determined the annual total compensation of each of our employees as of December 31, 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. We considered all Company employees, including those working less than 40 hours per week, and included base salary, annual incentive bonus, and stock compensation for purposes of determining the median employee. Using this methodology, we determined that our median employee was a full-time employee with the title of manager.
Pay Versus Performance
Pay Versus Performance The following table sets forth information concerning the compensation of our chief executive officer (principal executive officer or PEO) and the Company’s other named executive officers (NEOs) for 2020 through 2023 and our financial performance for each such year.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (1) | Average Summary Compensation Table Total for non-PEO NEOs | Average Compensation Actually Paid to non-PEO NEOs (1) | Value of Initial Fixed $100 Investment Based On | | Net Income (in millions) | Adjusted EBITDAre (3) (in millions) | | | | | | | Total Stockholder Return | Peer Group Total Stockholder Return(2) | | | | 2023 | $17,694,586 | $29,907,884 | $4,127,037 | $6,361,224 | $116.04 | $94.80 | $752 | $1,629 | | 2022 | 14,474,484 | 17,474,419 | 3,478,720 | 3,977,313 | 90.99 | 76.50 | 643 | 1,498 | | 2021 | 11,520,730 | 16,474,154 | 2,814,068 | 3,681,933 | 95.39 | 90.32 | (11) | 532 | | 2020 | 10,094,761 | 13,697,907 | 1,920,755 | 2,434,772 | 80.25 | 76.40 | (741) | (168) |
Pay Versus Performance
(1)Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our remaining NEOs for the relevant year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year:
Pay Versus Performance
| Year | PEO | Non-PEO NEOs | | 2023 | James F. Risoleo | Sourav Ghosh, Nathan Tyrrell, Julie Aslaksen and Michael Lentz | | 2022 | James F. Risoleo | Sourav Ghosh, Nathan Tyrrell, Julie Aslaksen and Michael Lentz | | 2021 | James F. Risoleo | Sourav Ghosh, Nathan Tyrrell, Julie Aslaksen and Joanne Hamilton | | 2020 | James F. Risoleo | Sourav Ghosh, Brian Macnamara, Nathan Tyrrell, Julie Aslaksen and Joanne Hamilton |
Pay Versus Performance
Compensation actually paid to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable year, adjusted as set forth in the table below. The dollar amounts shown do not reflect the value of vested compensation actually received by our NEOs during the applicable year. Instead, the dollar amounts also include the values of unvested and vested equity awards during the applicable year based on year-end stock prices, various accounting valuation assumptions and projected performance related to our performance-based restricted stock units. “Compensation actually paid,” determined in accordance with SEC rules, will generally fluctuate due to stock price achievement and varying levels of projected and actual achievement of performance goals applicable to our restricted stock units. For a discussion of how our Culture and Compensation Committee assesses performance and our NEOs’ pay each year, please see the Compensation Discussion & Analysis section of the proxy statements reporting pay for the applicable fiscal years.
Pay Versus Performance
| | 2020 | | 2021 | | 2022 | | 2023 | | | Adjustments | PEO | Average Non- PEO NEOs | PEO | Average Non- PEO NEOs | PEO | Average Non- PEO NEOs | PEO | Average Non- PEO NEOs | | Deduction for amounts reported under the “Stock Awards” columns in the Summary Compensation Table for the year | $(7,625,400) | $(1,054,768) | $(7,370,377) | $(1,338,855) | $(10,291,269) | $(2,004,567) | $(12,746,827) | $(2,350,134) | | Increase based on ASC 718 Fair Value of awards granted during applicable year that remain unvested as of the applicable year end, determined as of the applicable year end | 12,272,017 | 1,697,501 | 10,732,579 | 1,957,339 | 10,795,390 | 2,084,805 | 15,404,665 | 2,833,830 | | Increase/deduction for awards granted during prior years that were outstanding and unvested as of the applicable year end, determined based on the change in ASC 718 Fair Value from the prior year end to the applicable year end | (829,684) | (102,997) | 1,999,365 | 300,493 | 1,105,617 | 188,800 | 6,067,498 | 1,142,419 | | Increase/deduction for awards granted during prior years that vested during the applicable year, determined based on change in ASC 718 Fair Value from the prior year end to the vesting date | (397,270) | (51,417) | (229,683) | (28,413) | 446,039 | 60,344 | 1,627,488 | 261,819 | | Increase based on Dividends Paid during the year prior to vesting date | 183,484 | 25,698 | (178,461) | (22,698) | 944,159 | 169,210 | 1,860,474 | 346,254 | | Deduction of ASC 718 Fair Value of awards granted during prior year that were forfeited during the applicable year, determined as of prior year end | — | — | — | — | — | — | — | — | | TOTAL ADJUSTMENTS | $3,603,146 | $514,017 | $4,953,424 | $867,865 | $2,999,935 | $498,593 | $12,213,298 | $2,234,188 |
Pay Versus Performance
(2)Peer group total stockholder return is based on the cumulative total stockholder return of the NAREIT Lodging & Resorts Index. Total stockholder return amounts reported assume an initial fixed investment of $100 and that all dividends were reinvested. The Company and peer group total stockholder return for 2020 represents the one-year return for December 31, 2019 to December 31, 2020; for 2021 the returns shown represent the two-year return from December 31, 2019 to December 31, 2021; for 2022 the returns shown represent the three-year return from December 31, 2019 to December 31, 2022; and for 2023 the returns shown represent the four-year return from December 31, 2019 to December 31, 2023. (3)Adjusted EBITDAre is a predominant measure of operating performance used by real estate investment trusts and the Company reports the measure in accordance with NAREIT guidelines, with certain adjustments, as a supplemental measure of operating performance in its earnings releases, financial presentations and SEC filings. For more information on this measure and a reconciliation to the applicable GAAP measure, see the Company’s Annual Report on Form 10-K in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Net Income to EBITDA, EBITDAre and Adjusted EBITDAre for Host Inc. and Host L.P.” on page 73.
Director Compensation
Director Compensation
2023 Director Fees
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | All Other Compensation (3) | Total | | Mary L. Baglivo | $127,500 | $160,000 | $49,940 | $337,440 | | Herman E. Bulls | 103,000 | 160,000 | 44,735 | 307,735 | | Mary Hogan Preusse | 104,500 | 160,000 | 52,535 | 317,035 | | Diana M. Laing | 99,000 | 160,000 | 6,325 | 265,325 | | Walter C. Rakowich | 133,000 | 160,000 | 29,456 | 322,456 | | Gordon H. Smith | 141,000 | 160,000 | 24,861 | 325,861 | | A. William Stein | 104,500 | 160,000 | 24,611 | 289,111 |
2023 Director Compensation Program
2023 Director Compensation Program The Nominating, Governance and Corporate Responsibility Committee reviews and makes recommendations to the Board of Directors on compensation and benefits for the non-employee directors. The Committee generally reviews the compensatory arrangements of the non-employee directors biennially. The compensatory arrangements for both 2022 and 2023 were based on a review conducted in February 2022 by the Committee with the assistance of Pay Governance LLC. Pay Governance conducted an assessment of the competitiveness of the non-employee directors’ total compensation using market data, including director compensation practices for companies comprising the S&P 500 Index (of which Host is a constituent) as well as similar peer group companies used for executive compensation analyses. Set forth below are the complete components of director compensation for 2023, as approved by the Board upon the recommendation of the Committee.
2024 Director Compensation Program
2024 Director Compensation Program As noted above, the Nominating, Governance and Corporate Responsibility Committee reviews and makes recommendations to the Board of Directors on compensation and benefits for the non-employee directors. Under its charter, the Committee is authorized to engage consultants or advisors in connection with its review and analysis and the Committee retained Pay Governance to assist in its review. At the request of the Committee, Pay Governance conducted an assessment of the competitiveness of the non-employee directors’ total compensation using market data, including director compensation practices for companies comprising the S&P 500 Index (of which Host is a constituent) as well as similar peer group companies used for executive compensation analyses. Upon review and consideration, the Committee recommended, and the Board of Directors approved, the following changes to non-employee director compensation effective for 2024 in order to align with the latest market levels: uan increase in the value of the annual director stock award from $160,000 to $180,000; ua $10,000 increase in the annual cash retainer for non-employee directors to $90,000; ua $20,000 increase in the annual cash retainer for the Lead Director to $50,000; ua $2,000 increase in the annual cash retainer for members of the Culture and Compensation Committee to $10,000; and ua $5,000 increase in the annual cash retainer for the chair of the Nominating, Governance and Corporate Responsibility Committee to $20,000. In addition, the Board of Directors increased the thresholds (by one) for the number of meetings after which non-employee directors will receive additional fees. No changes were made to the amount of fees received. Accordingly, effective for 2024, non-employee directors will receive $1,500 per meeting for attendance at any Board meetings in excess of six. Similarly, non-employee directors will receive $1,500 per meeting for attendance at any committee meetings in excess of the following amounts: Audit Committee – eight meetings; Culture and Compensation Committee – six meetings; and Nominating, Governance and Corporate Responsibility Committee – six meetings. All other compensation for service on the Board and its committees was unchanged, and there were no changes to director perquisites.