DEF 14A of Hilton Worldwide Holdings Inc.

Filed Apr 5, 2024 · FY20230001585689-24-000088

Open on EDGAR

EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION For 2023, the Compensation Committee maintained our historic compensation program, given the results of our 2022 Say-on-Pay vote and broad support by the majority of stockholders. We value the perspective of our stockholders and during the off-season reached out to stockholders representing over 55% of our outstanding common stock. A significant portion of the compensation program for our Named Executive Officers (“NEOs”) is performance-based and at-risk, as illustrated below. The majority of target compensation is delivered in the form of equity that vests over multiple years, including 50% of our Long-Term Incentives ("LTI") comprising performance share units ("PSUs") that vest at the end of a three-year period based on defined growth targets. For our CEO, 87% of total target compensation is delivered in equity.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024 The following information describes the offices held, other business directorships and the term of each director nominee as of February 28, 2024. Beneficial ownership of equity securities of the director nominees is shown under “Ownership of Securities” on page 54.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Christopher J. Nassetta | | | | Christopher J. Nassetta, 61, joined Hilton as President and Chief Executive Officer in December 2007 and has served as a director of Hilton since that time. Previously, he was President and Chief Executive Officer of Host Hotels and Resorts, Inc., a position he held from May 2000 until October 2007. He joined Host in 1995 as Executive Vice President and was elected Chief Operating Officer in 1997. Before joining Host, Mr. Nassetta co-founded Bailey Capital Corporation, a real estate investment and advisory firm, in 1991. Prior to this, he spent seven years at The Oliver Carr Company, a commercial real estate company, where he ultimately served as Chief Development Officer. Mr. Nassetta is an Advisory Board member for the McIntire School of Commerce at the University of Virginia. He is also a member of the board of directors, nominating and corporate governance committee and compensation committee of CoStar Group, Inc. He is Chair of the U.S. Travel Association, a member and a past Chairman of The Real Estate Roundtable, former Chairman and Executive Committee member of the World Travel & Tourism Council, a member of the Economic Club of Washington, a member of the Federal City Council, and has served in various positions at the Arlington Free Clinic. Mr. Nassetta graduated from the McIntire School of Commerce at the University of Virginia with a degree in Finance. Qualifications, Attributes, Skills and Experience: extensive experience as an executive in the hospitality industry, extensive financial background and experience with real estate investments; his role as our President and Chief Executive Officer brings management perspective to board deliberations and provides valuable information about the status of our day-to-day operations. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Jonathan D. Gray | | | | Jonathan D. Gray, 54, is Chairman of our Board and has served as a director of Hilton since 2007. Mr. Gray is President and Chief Operating Officer of Blackstone Inc. (“Blackstone”), and has served as a member of the board of directors of Blackstone since February 2012. He previously served as global head of real estate for Blackstone from January 2012 through February 2018. He also sits on Blackstone’s management committee. Mr. Gray served as a senior managing director and co-head of real estate from January 2005 to December 2011. Mr. Gray received a B.S. in Economics from the Wharton School, as well as a B.A. in English from the College of Arts and Sciences at the University of Pennsylvania, where he graduated magna cum laude and was elected to Phi Beta Kappa. He is a member of the board of directors of Corebridge Financial. He also serves on the board of Harlem Village Academies. He previously served as a board member of Nevada Property 1 LLC (The Cosmopolitan of Las Vegas), Invitation Homes Inc., Brixmor Property Group and La Quinta Holdings Inc. Mr. Gray and his wife, Mindy, have established the Basser Research Center at the University of Pennsylvania School of Medicine, which focuses on the prevention and treatment of certain genetically caused breast and ovarian cancers. They also established NYC Kids RISE in partnership with the City of New York to accelerate college savings for low-income children. Qualifications, Attributes, Skills and Experience: substantial experience with real estate investing and extensive financial background, including in-depth knowledge of the real estate and hospitality industries. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| 4 | PROXY STATEMENT | Hilton |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Charlene T. Begley | | | | Charlene T. Begley, 57, has served as a director of Hilton since 2017. Ms. Begley served in various capacities at General Electric Company from 1988 through 2013. Most recently, she served in a dual role as Senior Vice President and Chief Information Officer, as well as the President and Chief Executive Officer of GE’s Home and Business Solutions business from January 2010 through December 2012. Ms. Begley served as President and Chief Executive Officer of GE Enterprise Solutions from August 2007 through December 2009. During her career at GE, she served as President and Chief Executive Officer of GE Plastics and GE Transportation, led GE’s Corporate Audit staff and served as the Chief Financial Officer for GE Transportation and GE Plastics Europe and India. Ms. Begley currently serves as a director and member of the audit and risk committee and chair of the nominating & ESG committee of Nasdaq, Inc. and a director and chair of the audit committee of SentinelOne, Inc., and previously served as a director and member of the audit and nominating committees of Red Hat, Inc. Ms. Begley also previously served as a director and member of the audit and nominating committees of WPP plc. Qualifications, Attributes, Skills and Experience: extensive business and management expertise, including leading divisions of a global enterprise, significant experience in technology, finance and information security, and service as a director of several public companies. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Chris Carr | | | | Chris Carr, 60, has served as a director of Hilton since 2020. Mr. Carr previously served as the Chief Operating Officer of Sweetgreen, Inc. from 2020 to 2023. From 2006 to 2019, he served in a variety of retail and supply chain senior executive roles at Starbucks, most recently as the Executive Vice President ("EVP"), Chief Procurement Officer, where he was responsible for enhancing the global strategic sourcing and supplier relationships. Mr. Carr served as Starbucks’ EVP, Americas Licensed Stores, leading the strategic planning, operations, market development and sales for 6,500 licensed retail stores. He also led their U.S. retail business as the EVP, U.S. Retail Stores, where he was accountable for the brand and omni-channel customer experience at approximately 13,000 U.S. company-operated and licensed retail stores. Prior to Starbucks, Mr. Carr spent 18 years in multiple executive leadership roles with ExxonMobil developing, leading and implementing retail operational strategies for its Global Fuels Marketing downstream businesses. Mr. Carr holds a B.S. in Business Administration from the University of San Diego, and an M.B.A. from the New York Institute of Technology. He serves on the board of directors for Recreational Equipment Inc. ("REI") and Bridgestone Americas and he is on the board of trustees for Howard University and the University of San Diego. Qualifications, Attributes, Skills and Experience: extensive business and management expertise, including leadership roles in a global enterprise, significant experience in supply chain, strategy, brands, consumer marketing and international operations. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Melanie L. Healey | | | | Melanie L. Healey, 62, has served as a director of Hilton since 2017. Ms. Healey served as Group President of The Procter & Gamble Company ("Procter & Gamble") from 2007 to 2015. During her tenure at Procter & Gamble, one of the leading providers of branded consumer packaged goods, Ms. Healey held several leadership roles, including Group President and advisor to the Chairman and CEO, Group President, North America and Group President, Global Health, Feminine and Adult Care Sector. Ms. Healey has more than 30 years of strategic, branding and operating experience from leading consumer goods companies including Procter & Gamble, Johnson & Johnson and S.C. Johnson & Sons. Ms. Healey serves as a director of PPG Industries, Inc., Verizon Communications Inc. and Kenvue Inc. She has informed Verizon Communications Inc. that she will not stand for re-election when her term expires at Verizon's 2024 annual meeting of shareholders. She previously served as a director of Target Corporation. Qualifications, Attributes, Skills and Experience: extensive business and management experience, including leadership roles in a global enterprise, significant experience in strategy, brands, consumer marketing and international operations and service as a director of several public companies. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Raymond E. Mabus, Jr. | | | | Raymond E. Mabus, Jr., 75, has served as a director of Hilton since 2017. Mr. Mabus brings significant public sector experience to the Hilton board, having served as the 75th United States Secretary of the Navy from 2009 to 2017. He was the United States Ambassador to the Kingdom of Saudi Arabia from 1994 to 1996, the 60th Governor of Mississippi from 1988 to 1992 and Auditor of the State of Mississippi from 1984 to 1988. He is currently CEO of Mabus Group, a consulting company, and vice-chair of InStride, a public benefit company. Mr. Mabus currently serves as chair of Virgin Galactic Holdings, a public company, and on the board of Amentum Services, Inc., a private company, and on the non-profit boards of World Central Kitchen and the Environmental Defense Fund. He previously served as a director of Dana Incorporated, as chair of Kadem Sustainable Impact Corp. and as Chairman and Chief Executive Officer of Foamex International. Qualifications, Attributes, Skills and Experience: extensive international experience, including as U.S. ambassador to the Kingdom of Saudi Arabia, public policy and government relations experience, including as U.S. Secretary of the Navy and Governor of the State of Mississippi, and public company executive and board experience. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Hilton | PROXY STATEMENT | 5 |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Judith A. McHale | | | | Judith A. McHale, 77, has served as a director of Hilton since 2013. Ms. McHale has served as President and Chief Executive Officer of Cane Investments, LLC since August 2011. From May 2009 to July 2011, Ms. McHale served as Under Secretary of State for Public Diplomacy and Public Affairs for the U.S. Department of State. From 2006 to March 2009, Ms. McHale served as a Managing Partner in the formation of GEF/ Africa Growth Fund. Prior to that, Ms. McHale served as the President and Chief Executive Officer of Discovery Communications. Ms. McHale currently serves on the board of directors of Paramount and previously served on the board of directors of Ralph Lauren Corporation and Sea World Entertainment, Inc. Ms. McHale graduated from the University of Nottingham in England and Fordham University School of Law. Qualifications, Attributes, Skills and Experience: extensive business and management expertise, including experience as a chief executive officer and director of several public companies, as well as prior service as a high-ranking official in the U.S. Department of State. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Elizabeth A. Smith | | | | Elizabeth A. Smith, 60, has served as a director of Hilton since 2013. Ms. Smith is Executive Chair of Revlon. She was a member of the board of directors of Bloomin’ Brands, Inc. from November 2009 to April 2023 and previously served as its Executive Chairman of the Board from April 2019 to February 2020, its Chairman of the Board from January 2012 to April 2019, and its Chief Executive Officer from November 2009 to April 2019. From September 2007 to October 2009, Ms. Smith was President of Avon Products, Inc., a global beauty products company, and was responsible for its worldwide product-to-market processes, infrastructure and systems, including Global Brand Marketing, Global Sales, Global Supply Chain and Global Information Technology. In January 2005, Ms. Smith joined Avon Products, Inc. as President, Global Brand, and was given the additional role of leading Avon North America in August 2005. From September 1990 to November 2004, Ms. Smith worked in various capacities at Kraft Foods Inc. Ms. Smith currently serves on the board of directors of Brown-Forman Corporation and the U.S. Fund for UNICEF. Ms. Smith previously served as chair of the Atlanta Federal Reserve Board, as a member of the board of directors and audit committee of Staples, Inc. and as a member of the board of directors of The Gap, Inc. Ms. Smith holds a bachelor’s degree, Phi Beta Kappa, from the University of Virginia and an M.B.A. from the Stanford Graduate School of Business. Qualifications, Attributes, Skills and Experience: experience in strategy, brands, marketing and sales, as well as corporate finance and financial reporting developed in her executive level roles where her responsibilities have included direct financial oversight of multinational companies with multiple business units. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| Douglas M. Steenland | | | | Douglas M. Steenland, 72, has served as a director of Hilton since 2009. Mr. Steenland worked for Northwest Airlines Corporation from September 1991 to October 2008, serving as Chief Executive Officer from April 2004 to October 2008 and as President from February 2001 to April 2004. During his tenure at Northwest Airlines, he also served as Executive Vice President, Chief Corporate Officer and Senior Vice President and General Counsel. Mr. Steenland retired from Northwest Airlines upon its merger with Delta Air Lines, Inc. Prior to his time at Northwest Airlines, Mr. Steenland was a senior partner at a Washington, D.C. law firm that is now part of DLA Piper. Mr. Steenland is a member of the board of directors of American Airlines Group Inc. Mr. Steenland previously served as a director of American International Group, the London Stock Exchange, Performance Food Group Company, Travelport Worldwide Limited, Digital River, Inc. and Chrysler Group LLC. Mr. Steenland received a B.A. from Calvin College and is a graduate of The George Washington University Law School. Qualifications, Attributes, Skills and Experience: experience in managing large, complex, international institutions generally and experience as a member of global public company boards and an executive in the travel and hospitality industries in particular. |
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
| 6 | PROXY STATEMENT | Hilton |
COMPENSATION COMMITTEE
As requested by the Compensation Committee, in 2023, Exequity’s services to the Compensation Committee included, among other things, providing perspective on current trends and developments in executive and director compensation, as well as analysis of benchmarking data and confirmation of our peer group composition.
ANNUAL COMPENSATION PROGRAM
| Pay Element | Retainer Amount(1) | | | | Board Service | | | | | Annual Equity Award | | $200,000 | | | Annual Cash Retainer | | $100,000 | | | Lead Independent Director | | $75,000 | | | Committee Service | Chair | Member | | | Audit Committee | $30,000 | $15,000 | | | Compensation Committee | $25,000 | $10,000 | | | Nominating & ESG Committee | $20,000 | $10,000 | |
ANNUAL COMPENSATION PROGRAM
(1)Cash compensation is payable in arrears on a semi-annual basis. All of our directors are reimbursed for reasonable travel and related expenses associated with attendance at Board or committee meetings. In addition, they are eligible to participate in our travel perquisite program, which provides for Company-paid rooms, food and beverage and on-site services for non-employee directors and executive officers, and their accompanying family members, while on personal travel at Company-branded hotels. For additional details on our travel perquisite program, see “Other Benefits and Perquisites” in the CD&A. Non-employee directors who retire from the Board with at least seven years of service are currently eligible for reimbursement for rooms, food and beverage and on-site services at Company-branded hotels for up to 30 nights annually (subject to a specified cap, which is currently $20,000), concierge services, access to our Team Member discount program and lifetime Diamond status in our Hilton Honors guest loyalty program. Currently, there is one former director who is eligible for this retiree benefit and this benefit may be amended or discontinued at any time. Equity awards are granted to our non-employee directors annually upon his or her election or re-election at our annual meeting of stockholders. The 2023 annual equity award was $200,000 and delivered in the form of deferred share units (“DSUs”), where the number of DSUs awarded is equal to $200,000 divided by the closing price of our common stock on the grant date. The equity currently held by our directors was awarded under the Hilton 2017 Omnibus Incentive Plan (the “2017 Incentive Plan”) and, prior to its adoption, the Hilton Worldwide Holdings Inc. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan” and, together with the 2017 Incentive Plan, the “Incentive Plans”) and the material terms thereof are outlined in the table below.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS
DIRECTOR COMPENSATION FOR 2023
DIRECTOR COMPENSATION FOR 2023 The table below sets forth information regarding non-employee director compensation for the fiscal year ended December 31, 2023.
DIRECTOR COMPENSATION FOR 2023
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | Charlene T. Begley | $140,000 | $199,924 | $24,740 | $364,664 | | Chris Carr | $110,000 | $199,924 | $17,002 | $326,926 | | Jonathan D. Gray | $100,000 | $199,924 | — | $299,924 | | Melanie L. Healey | $110,000 | $199,924 | — | $309,924 | | Raymond E. Mabus, Jr. | $115,000 | $199,924 | $32,642 | $347,566 | | Judith A. McHale | $125,000 | $199,924 | $10,604 | $335,528 | | Elizabeth A. Smith | $120,000 | $199,924 | — | $319,924 | | Douglas M. Steenland | $200,000 | $199,924 | $28,473 | $428,397 |
DIRECTOR COMPENSATION FOR 2023
(1)Reflects amounts paid in accordance with our semi-annual pay cycle. (2)Represents the grant date fair value of DSUs computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 based on the closing price on the NYSE of our common stock on the grant date. Each eligible non-employee director was granted 1,367 DSUs on May 18, 2023, representing the director’s annual equity award for the annual period from the 2023 Annual Meeting to the 2024 Annual Meeting. In accordance with the SEC’s rules, any dividend equivalents that accrued on the directors’ DSU awards are not reported above because dividends were factored into the grant date fair value of these awards. For details regarding the directors’ beneficial ownership of equity securities, including their outstanding DSUs, see “Ownership of Securities." (3)Perquisites and other personal benefits for a director are excluded if the total value of all such perquisites and personal benefits is less than $10,000. Reflects all Company-paid expenses incurred at Company-branded hotels while on personal travel under our travel perquisite program. For each stay, we included the full nightly room rate charged by the hotel, associated room taxes and fees, parking, food and beverage charges and other on-site services.
DIRECTOR COMPENSATION FOR 2023
| Hilton | PROXY STATEMENT | 17 |
DIRECTOR COMPENSATION FOR 2023
EXECUTIVE OFFICERS OF THE COMPANY Set forth below is certain information regarding each of our current executive officers as of February 28, 2024, other than Mr. Nassetta, whose biographical information is presented under “Nominees for Election to the Board of Directors in 2024.”
DIRECTOR COMPENSATION FOR 2023
| Anne-Marie W. D'Angelo | | | | Anne-Marie W. D'Angelo, 47, has been our Executive Vice President, General Counsel and Secretary since September 2023. She served as Chief Legal and Government Affairs Officer of Molson Coors from 2021 to 2023. From 2019 to 2021, she served as General Counsel and Corporate Secretary for NiSource, an energy holding company, first as Senior Vice President and later as Executive Vice President. Before joining NiSource, Ms. D’Angelo served as General Counsel and Corporate Secretary of Global Brass and Copper Holdings from 2017 to 2019. Prior to joining Global Brass and Copper Holdings, Ms. D’Angelo spent nearly 13 years at McDonald’s Corporation serving in various roles of increasing responsibility. She began her career at a midsize Chicago law firm practicing commercial real estate and corporate law. Ms. D’Angelo serves on the PODER25 Advisory Council and is an active member of the Hispanic National Bar Association. Ms. D’Angelo holds a Juris Doctor from the University of Notre Dame Law School and a bachelor’s degree in English from the College of the Holy Cross. |
DIRECTOR COMPENSATION FOR 2023
| Laura A. Fuentes | | | | Laura Fuentes, 48, was appointed as Executive Vice President and Chief Human Resources Officer in October 2020. She joined Hilton in 2013, and has led teams across Human Resources functions including Recruiting, Diversity & Inclusion, Learning & Leadership Development, Total Rewards, People Analytics & Strategy and HR Consulting. Most recently, she served as Chief Talent Officer. Prior to joining Hilton, Ms. Fuentes spent six years at Capital One Financial Corporation in various corporate strategy and Human Resources roles, leading workforce analytics, recruitment and compensation functions for the organization. Prior to Capital One, she worked at McKinsey & Company in their Madrid, New York and Washington D.C. offices, where she served clients across financial services and non-profit sectors. Ms. Fuentes serves on the board of directors of Chipotle Mexican Grill, Inc. She is an Advisory Board member for the McIntire School of Commerce at the University of Virginia, serves on the board of directors of Make-a-Wish Mid-Atlantic as Vice Chair, and also represents Hilton on Tent Partnership for Refugees' U.S. Advisory Council. Originally from Spain, she holds a B.S. from the University of Virginia, an M.S. in Structural Engineering from the University of Texas at Austin and an M.B.A. from Columbia University. |
DIRECTOR COMPENSATION FOR 2023
| Kevin J. Jacobs | | | | Kevin J. Jacobs, 51, is our Chief Financial Officer and President, Global Development, and leads the Company’s Finance, Real Estate, Development and Architecture and Construction functions globally. Mr. Jacobs joined the Company in 2008 as Senior Vice President, Corporate Strategy; was elected Treasurer in 2009; was appointed Executive Vice President and Chief of Staff in 2012; assumed the role of Chief Financial Officer in 2013; and added the role of President, Global Development in 2020. Prior to Hilton, Mr. Jacobs was Senior Vice President, Mergers & Acquisitions and Treasurer of Fairmont Raffles Hotels International. Prior to Fairmont Raffles, Mr. Jacobs spent seven years with Host Hotels and Resorts, Inc., ultimately serving as Vice President, Corporate Strategy & Investor Relations. Prior to Host, Mr. Jacobs had various roles in the Hospitality Consulting Practice of PricewaterhouseCoopers LLP and the Hospitality Valuation Group of Cushman & Wakefield, Inc. Mr. Jacobs is a member of the board of directors of Omega Healthcare Investors, Inc., a triple-net equity REIT that supports the goals of skilled nursing facility and assisted living facility operators with financing and capital. He is also a trustee of Cornell University and a member of the Dean's Advisory Board of the Cornell University School of Hotel Administration, is Vice Chairman of the Board of Directors and Treasurer of Goodwill of Greater Washington, is a Trustee and member of the Executive Committee of the Federal City Council, and serves as Board Chair of the American Hotel & Lodging Association. He is a graduate of the Cornell University School of Hotel Administration. |
DIRECTOR COMPENSATION FOR 2023
| 18 | PROXY STATEMENT | Hilton |
REPORT OF THE AUDIT COMMITTEE
| CREATION OF LONG-TERM VALUE |
REPORT OF THE AUDIT COMMITTEE
| Pay Elements | Form | Performance Measures & Key Characteristics | | | Base Salary (on page 29) | Cash | | •Provide a competitive fixed level of pay | | Annual Cash Incentives Maximum Payout: 2x target (on page 29) | Cash | Financial CEO: 50% Other NEOs: 40% | •Annual Adjusted EBITDA(1) | | | | Business Area & Organizational Strength CEO: 50% Other NEOs: 60% | •Business Area: Primarily quantitative objectives •Organizational Strength: ESG and HCM objectives (including our ongoing commitment to an inclusive workplace, Team Member engagement and talent management efforts), as well as Customer Promise objectives (including providing guests with the most reliable and friendly stays) | | Long-Term Incentives ("LTI") (on page 34) | Equity | PSUs: 50% Maximum Payout: 2x target | •Free Cash Flow ("FCF") per share, Adjusted EBITDA(1), Net Unit Growth ("NUG") compound annual growth rate (“CAGR") and RevPAR Index Growth (“RPI Growth”) •Vest at the end of a 3-year period | | | | Stock Options: 25% | •Vest ratably over 3 years | | | | Restricted Stock Units ("RSUs"): 25% | •Vest ratably over 2 years |
ROLES IN MAKING COMPENSATION DECISIONS
| Compensation Committee | •With input from our Board and its independent compensation consultant, the Committee oversees and approves key aspects of executive compensation, including our CEO’s and other executive officers’ salaries, goals and payouts under the annual cash incentive plan, the size and structure of LTI awards and any executive perquisites or other benefits. •In determining compensation for our NEOs, the Committee considers the factors outlined above and consults with its independent compensation consultant and the CEO (regarding the NEOs other than himself). In determining compensation for the CEO, the Committee also reviews the CEO’s self-assessment of his performance against his Board-approved financial, business area and organizational strength objectives. •In implementing the Company’s executive compensation program, the Committee takes into account the cyclical nature of the hospitality business, competitive market data and the alignment of the Company’s total pay opportunity and pay outcomes with performance. | | Management | •The CEO and Chief Human Resources Officer work closely with the Committee in managing the executive compensation program and attend meetings of the Committee. •The CEO makes recommendations to the Committee regarding compensation for executive officers other than himself. | | Independent Compensation Consultant | •The Committee’s independent compensation consultant, Exequity, provides research, survey information and analysis, incentive design expertise and other analyses related to compensation levels and design. Exequity also updates the Committee on trends and developments related to executive compensation practices and provides its views to the Committee on best practices when evaluating executive pay programs and policies. •In 2023, Exequity’s services to the Committee included providing perspective on current trends and developments in executive and director compensation, analyzing benchmarking data and evaluating our peer group composition. It otherwise performed no other services for the Company. The Committee evaluated whether any of the work provided by Exequity during 2023 raised any conflict of interest and determined that it did not. |
EXECUTIVE COMPENSATION PROGRAM OVERVIEW & PAY FOR PERFORMANCE
| Pay Elements | Form | Performance Measures & Key Characteristics | | | Base Salary (on page 29) | Cash | | •Provide a competitive fixed level of pay | | Annual Cash Incentives Maximum Payout: 2x target (on page 29) | Cash | Financial CEO: 50% Other NEOs: 40% | •Annual Adjusted EBITDA(1) | | | | Business Area & Organizational Strength CEO: 50% Other NEOs: 60% | •Business Area: Primarily based on quantitative objectives •Organizational Strength: ESG and HCM objectives (including our ongoing commitment to an inclusive workplace, Team Member engagement and talent management efforts), as well as Customer Promise objectives (including providing guests with the most reliable and friendly stays) | | LTI (on page 34) | Equity | PSUs: 50% Maximum Payout: 2x target | •FCF per share, Adjusted EBITDA, NUG CAGR and RPI Growth •Vest at the end of a 3-year period | | | | Stock Options: 25% | •Vest ratably over 3 years | | | | RSUs: 25% | •Vest ratably over 2 years |
PERFORMANCE-BASED INCENTIVES WITH RIGOROUS TARGETS
| Factors Considered in Developing Performance Goals | | | | Business Environment •Competitive environment •Hospitality industry trends and outlook •Market growth •Global economic conditions | Additional External Factors •Analyst and stockholder expectations •Market outlook •Macroeconomic trends | Internal Factors •Historic and current performance •Corporate strategy and key strategic priorities •Annual and long-term operating plans •Capital expenditure opportunities and decisions |
ANNUAL CASH INCENTIVE PROGRAM
ANNUAL CASH INCENTIVE PROGRAM Our annual cash incentive program is designed to motivate executive officers to focus on strategic business results and initiatives and reward them for their results and achievements.
TARGET SETTING FOR ANNUAL CASH INCENTIVE PROGRAM
TARGET SETTING FOR ANNUAL CASH INCENTIVE PROGRAM At the beginning of the performance year, the Committee established the target, threshold and maximum levels of achievement. The Committee sets the primary financial performance objective, Adjusted EBITDA, based on Company and industry outlook for the year, as well as historical and projected growth rates for Hilton. The Adjusted EBITDA target is aligned with the Company’s annual operating plan and is designed so that target payout requires achievement of a high degree of business performance without encouraging excessive risk-taking. The non-financial objectives were set to drive performance on our key strategic priorities (“KSPs”). For 2023, the Adjusted EBITDA target was set higher than 2022 performance results. The financial and non-financial performance targets were set at levels that would be challenging and not certain to be met. In setting the performance range around target for the financial performance objective, the Committee considered the continued uncertainty due to the pandemic in certain regions and segments of our business and the outsized volatility of its impact on the hospitality industry. The Committee was focused on setting a target that would be appropriately challenging during a period of ongoing recovery, as well as the potential for unintended upside if travel during the pandemic were to rebound more quickly than anticipated. Therefore, the Committee continued to set threshold and maximum as a wider range around target (i.e., 20% in 2023 compared to 10% prior to the pandemic), making it more difficult to achieve maximum payout.
2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM
2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM Each NEO’s target annual cash incentive opportunity is expressed as a percentage of their base salary in effect at the end of the performance period. Threshold, target and maximum annual incentive opportunities are approved annually by the Committee based on peer group benchmark data and the scope and impact the executive has on the Company’s overall results. For 2023, the Committee maintained our historical threshold, target and maximum payout levels as set forth in the table below.
2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM
| Name | Threshold(1) | Target(1) | Maximum(1) | | Christopher J. Nassetta | 75% | 150% | 300% | | Kevin J. Jacobs | 50% | 100% | 200% | | Christopher W. Silcock | 50% | 100% | 200% | | Matthew W. Schuyler | 50% | 100% | 200% | | Laura A. Fuentes | 50% | 100% | 200% |
2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM
(1)As a percentage of base salary.
2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM
| Hilton | PROXY STATEMENT | 29 |
2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM
2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM At the beginning of the performance year, each NEO’s annual cash incentive award opportunity is based on pre-established performance objectives. Our CEO works with senior management to establish KSPs, which are then used to create the performance objectives. Each objective is given a specific weighting based on its scope, importance and strategic relevance. The Committee then reviews and approves the objectives recommended for each NEO. Similar to last year, our 2023 program was based on the three categories outlined below: financial performance, business area performance and organizational strength objectives. Our commitment to our Travel with Purpose 2030 goals is incorporated within our organizational strength objectives. Given the strategically and operationally diverse nature of our business, the mix of recommended objectives from within the business area performance and organizational strength categories is NEO-specific. All NEOs have the same primary financial performance objective given the importance of Annual Adjusted EBITDA as a measure of short- and long-term financial performance in our business. A significant portion of our annual cash incentive performance objectives are quantitative in nature, as demonstrated by the key measures and metrics for our annual performance objectives listed below. In addition to using Annual Adjusted EBITDA to measure achievement in financial performance, we use quantifiable measures wherever feasible and appropriate to measure outcomes in our business area performance and organizational strength categories. On average, nearly 80% of our annual cash incentive performance objectives include quantitative performance measures.
2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM
| Weighting(1) | Performance Objectives: Key Measures and Metrics aligned to our KSPs(1) | | | | | | FINANCIAL PERFORMANCE | | | | | | Maximize our Performance | | | | | | •Annual Adjusted EBITDA(2) – Adjusted EBITDA is the key metric used to assess performance of our business over the short-term and is a common measure to compare our results across companies in the industry. Further, the Committee believes it provides useful information to investors about the Company, our financial condition and the results of our operations | | | | | | BUSINESS AREA PERFORMANCE | | | | | | Win with our Customers | Enhance our Network Effect | | Maximize our Performance | | | •Digital & Online Travel Agency Channel Mix Change •Hilton Honors Enrollment & Occupancy •U.S. Co-brand Acquisition & U.S. Co-brand Active Hilton Honors Members •Additional Qualitative Objectives | •Progress on Approved Deals through Construction Starts •Net Unit Growth •New Franchise & Management Agreements | | •HSM Adjusted EBITDA •Real Estate Adjusted EBITDA •RPI Growth | | | ORGANIZATIONAL STRENGTH | | | | | | Lead with our Culture | | Maximize our Performance and Win with our Customers | | | | •Progress toward Travel with Purpose 2030 Goals •Global Team Member Engagement Survey Results •Additional Qualitative Objectives | | •Customer Overall Experience | |
2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM
(1)For the CEO, 50% of the total incentive award opportunity was based on financial performance and 50% was based on business area performance and organizational strength, representing results across the Company. For the NEOs other than the CEO, 40% of the total incentive award opportunity was based on financial performance, 40% was based on business area performance and 20% was based on organizational strength; their business area objectives reflect only the measures applicable to their specific business area(s). (2)For each NEO other than Mr. Schuyler, the financial performance measure was based solely on Adjusted EBITDA, which is calculated as set forth in "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Mr. Schuyler’s financial measure included both Adjusted EBITDA (20% of his total award opportunity) and a Franchise Fees metric (20% of his total award opportunity). For discussion on our Franchise Fees, refer to "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. See Annex A for additional information and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure.
2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM
| 30 | PROXY STATEMENT | Hilton |
2023 PERFORMANCE RESULTS FOR ANNUAL CASH INCENTIVE PROGRAM
2023 PERFORMANCE RESULTS FOR ANNUAL CASH INCENTIVE PROGRAM
Financial Performance Measure Results
| Financial Performance Measure | | | | | Adjusted EBITDA(1) | | | | | | Actual Achievement | | Actual Achievement as a Percentage of Target Payout: 140% | | | Prior Year Actual Achievement | | |
Financial Performance Measure Results
(1)As described on the previous page, for each NEO other than Mr. Schuyler, the financial performance measure was based solely on Adjusted EBITDA. Adjusted EBITDA is calculated as set forth in "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. See Annex A for additional information and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure. (2)To receive a payout based on Adjusted EBITDA (and a Franchise Fees metric for Mr. Schuyler), actual performance must exceed the threshold performance goal. NEOs were eligible to receive a threshold payout percentage, defined as 50% of the target award, if actual achievement was 80% of the target financial goal, and were eligible to receive the maximum payout percentage, defined as 200% of the target award, if actual achievement met or exceeded 120% of the target financial goal. For actual performance between the specified threshold, target and maximum levels, the resulting payout percentage would have been adjusted on a linear basis.
Non-Financial Performance Measure Results
Non-Financial Performance Measure Results After the end of the performance period, each objective described on page 30 was assessed and rated based on the level of achievement. Our Finance and Human Resources departments reviewed performance results against the predetermined objectives with the CEO. The key achievements for our NEOs on the 2023 annual cash incentive program are outlined in the table below. The CEO then reviewed these results with the Committee and recommended payout amounts under the annual cash incentive plan for each of the NEOs, other than himself.
Non-Financial Performance Measure Results
| Name | Year-End Base Salary ($) | Target Annual Cash Incentive Opportunity as a Percentage of Base Salary (%) | Target Annual Cash Incentive Opportunity ($) | Actual Amount Earned as a Percentage of Target Payout | | | Actual Amount Earned Under Annual Cash Incentive Program ($) | | | | | | Payout Based on Financial Performance (%) | Payout Based on Business Area & Organizational Strength (%) | Total Payout as a Percentage of Target (%) | | | Christopher J. Nassetta | $1,300,000 | 150% | $1,950,000 | 140% | 144% | 142% | $2,776,998 | | Kevin J. Jacobs | $1,000,000 | 100% | $1,000,000 | 140% | 138% | 139% | $1,386,503 | | Christopher W. Silcock(1) | $722,834 | 100% | $722,834 | 140% | 142% | 141% | $1,020,282 | | Matthew W. Schuyler | $800,000 | 100% | $800,000 | 127% | 138% | 134% | $1,067,745 | | Laura A. Fuentes | $731,250 | 100% | $731,250 | 140% | 150% | 146% | $1,068,724 |
LTI PROGRAM
LTI PROGRAM The LTI program is designed to reward for future Company performance, align with the long-term interests of our stockholders and retain executives over multi-year vesting periods. LTI compensation is awarded annually and provides an opportunity for executive officers and other key Team Members to increase their ownership interest in the Company through grants of equity-based awards.
2023 LTI TARGETS
2023 LTI TARGETS Each NEO’s target LTI opportunity is approved annually by the Committee after considering level of pay relative to peer group benchmark data and internal equity and the scope and impact the executive has on the Company’s overall results. The Committee generally delivers the majority of any increase to target compensation in the form of LTI, because target LTI opportunity is the pay element most aligned with stockholder value over the long term. In March 2023, the Committee set the target pay levels as set forth in the table below. The LTI program is designed to retain executives over multi-year periods, which is reflected by the long tenure of the executives below, who average more than a decade of service with Hilton.
2023 LTI TARGETS
| Name | 2022 Target Long-Term Incentive(1) ($) | 2023 Target Long-Term Incentive(1) ($) | | Christopher J. Nassetta | $18,275,000 | $21,750,000 | | Kevin J. Jacobs | $5,600,000 | $6,500,000 | | Christopher W. Silcock | $2,549,684 | $3,375,561 | | Matthew W. Schuyler | $2,717,398 | $2,870,000 | | Laura A. Fuentes | $1,844,050 | $2,187,500 |
2023 LTI TARGETS
(1)The dollar values above represent the nominal amounts used to determine the number of PSUs, RSUs and stock options granted. For the grant date fair value of the 2023 awards computed in accordance with FASB ASC Topic 718, see the SCT and “Grants of Plan-Based Awards.”
2023 LTI GRANTS
2023 LTI GRANTS In March 2023, the Committee granted LTI awards at 100% of target. Grants under the LTI program were delivered using a blended equity portfolio, with 25% of the total LTI award amount for each NEO delivered in stock options, 25% in RSUs and 50% in PSUs, as summarized in the table below. The largest portion of the total equity award takes the form of PSUs to incentivize our NEOs to achieve our most critical long-term objectives, with the remaining portion equally split between stock options and RSUs to promote retention, serve as a linkage to stockholder value and increase NEOs’ ownership interest in the Company.
2023 LTI GRANTS
| Pay Element | Form | Key Characteristics | | | LTI | Equity | PSUs: 50%(1) Maximum Payout: 2x target | Vest at the end of a 3-year period | | | | Stock Options: 25% | Vest ratably over 3 years | | | | RSUs: 25%(1) | Vest ratably over 2 years |
2023 LTI GRANTS
(1)PSUs and RSUs accrue dividend equivalents payable in cash following vesting, to the extent the underlying award vests. No dividend equivalents are paid unless the underlying PSUs or RSUs vest.
TARGET SETTING FOR PSUs
TARGET SETTING FOR PSUs Our PSU targets are aligned with our long-term strategic priorities and are designed so that a target payout requires achievement of stretch goals at the end of a three-year period. For 2023 targets, the Committee considered the performance level necessary to achieve strong market share, grow our footprint while maintaining quality, utilize our balance sheet for only highly strategic investments and have disciplined use of capital expenditures and management of general and administrative expenses through relentless prioritization. When setting targets, the Committee takes into consideration historical performance, as well as the results of our comprehensive budgeting and forecasting process. The forecasting process is extensive and our modeling takes into account upside and downside scenarios, and sensitivity analysis. The effects of the pandemic continued to impact our business performance in certain regions and segments and created market volatility. In setting the performance range around target, the Committee considered the uncertainty due to the pandemic and the outsized volatility of its impact on the hospitality industry. The Committee was focused on setting a target that would be appropriately challenging during a period of ongoing recovery, as well as the potential for unintended upside if travel during the pandemic were to rebound more quickly than anticipated. Therefore, the Committee continued to set threshold and maximum as a wide range around target (i.e., at 20% to 30% or more), making it more difficult to achieve maximum payout.
TARGET SETTING FOR PSUs
| 34 | PROXY STATEMENT | Hilton |
PSUs GRANTED IN 2023
PSUs GRANTED IN 2023 For the PSUs granted in March 2023, the Committee chose four equally weighted metrics as performance measures, consistent with those selected in 2022: FCF per share, Adjusted EBITDA, NUG CAGR and RPI Growth. The Committee selected these metrics, which represent key performance indicators used by the Company and our stockholders to provide a foundation for long-term growth and promote long-term stockholder value creation, as described in greater detail below. All of the PSUs granted in 2023 vest at the end of a three-year period beginning on January 1, 2023 and ending on December 31, 2025. The Committee will determine the number of PSUs earned based on the level of achievement of each of the four performance measures after the performance period. Based on the level of achievement, the percentage of the award earned can range from zero to 200% of target. We will disclose the achievement results and any payouts, along with retroactively disclosing the targets for the metrics that do not cause competitive harm, after the awards vest.
PSUs GRANTED IN 2023
| Weighting | Metric | Why We Selected These Metrics | Performance Period(1) | | 25% | FCF per share(2) | FCF measures the Company’s ability to generate cash from its operations to allow for the return of capital to stockholders in the form of dividends or share repurchases and FCF per share emphasizes Company performance and value creation through disciplined capital allocation over the long-term. It is also a measure used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in the industry | •Final-year measurement (3rd year of period: January 1, 2025 - December 31, 2025) | | 25% | Adjusted EBITDA(3) | Adjusted EBITDA is among the measures used by the Company to evaluate its financial condition and results of operations on a comparable period-over-period basis and to make day-to-day operating decisions. It is also a measure frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in the industry | •Final-year measurement (3rd year of period: January 1, 2025 - December 31, 2025) | | 25% | NUG CAGR(4) | NUG focuses on one of the Company’s strategic objectives, the continued expansion of its global presence and fee-based business. We believe it is an important operational growth driver and meaningful measure for many investors | •Three-year measurement (January 1, 2023 - December 31, 2025) | | 25% | RPI Growth(5) | RevPAR correlates to two key drivers of operations at a hotel or group of hotels: occupancy and average daily rate. RevPAR Index measures a hotel's relative share of its segment’s RevPAR and indicates whether the Company’s hotels have outperformed other hotels in its competitive set. We also believe it demonstrates to hotel owners the strength of our brands | •Final-year measurement (3rd year of period: January 1, 2025 - December 31, 2025) |
PSUs GRANTED IN 2023
(1)We have continued our historical practice of using a performance period that ends after three years for PSUs. The NUG CAGR metric is based on a three-year performance measurement period. The FCF per share, Adjusted EBITDA and RPI Growth metrics are based on a final-year measurement after three years. The Committee considers final-year measurement attributable to a three-year period because the target level was determined after modeling the performance that we would need to achieve over the entire three-year period in order to be positioned to attain final-year goals. (2)FCF per share is calculated as: (a) net cash provided by (used in) operating activities reported in accordance with GAAP, less (b) capital expenditures as disclosed by the Company in reports filed with or furnished to the SEC, plus (c) costs and expenses, including tax payments, relating to asset purchases and disposals, less (d) the net impact on annual adjusted free cash flow resulting from any loyalty program advanced point sales and less (e) the impact of other non-recurring cash items; the result of which is divided by (f) the reported diluted weighted average number of shares outstanding for the calendar year being measured. (3)Adjusted EBITDA is calculated as set forth in "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (4)NUG represents the Company’s management and franchise hotel portfolio room growth over a specified period, calculated as the total management and franchise hotel room count as of the end of the performance period less the count at the beginning of the performance period, excluding the impact of any portfolio acquisition or disposition. NUG CAGR means the compound annual growth rate at which the total management and franchise hotel room count for the final year of the performance period grew relative to the first year of the performance period, assuming a steady growth rate. (5)RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. RevPAR Index is calculated as the weighted average of the Company’s relative share of RevPAR compared to each hotel’s competitive set, as calculated by STR, Inc. and related institutions, for the Company’s comparable hotels as of the end of the period. RevPAR Index Growth is calculated as the RevPAR Index for the last year of the performance period less the RevPAR Index for the year preceding, using the Company’s comparable hotels as of the end of the performance period.
PSUs GRANTED IN 2023
| Hilton | PROXY STATEMENT | 35 |
PAYOUT OF 2021 PSUs
PAYOUT OF 2021 PSUs In February 2024, the Committee certified performance at 200% of target based on the performance level achieved through December 31, 2023, as illustrated below. As our strong financial results show, we made significant progress in our post-pandemic recovery throughout 2023, growing RevPAR by 12.6% YOY and Adjusted EBITDA by 19% YOY. We saw a meaningful increase in demand for travel and tourism and continued to expand our global presence adding new destinations to our portfolio.
PAYOUT OF 2021 PSUs
| Performance Metrics(1) | | | | | | FCF per share(2) (25%) | | | NUG CAGR (25%) | | | Adjusted EBITDA (25%) | | | RPI Growth(2) (25%) | | | | Actual Achievement | | | | | | Actual Achievement at the Time Targets were Established | | | | | Total 2021 PSU Payout: 200% | | | | |
PAYOUT OF 2021 PSUs
(1)Details regarding the metrics are described above under “PSUs granted in 2023.” (2)Amounts for FCF per share and RPI Growth are not disclosed as doing so could create competitive harm. We have disclosed target levels above compared to actual achievement at the time targets were established for all PSU metrics in order to provide transparency. We have retroactively disclosed the targets for two of the 2021 PSU metrics (NUG CAGR and Adjusted EBITDA). At this time, the Board has determined that disclosing the targets for the other two metrics (FCF per share and RPI Growth), even retroactively, could create competitive harm. We have historically disclosed targets each year since we began granting PSUs, with the exception of FCF per share and RPI Growth, which we commit to disclosing retroactively at such time that disclosures would not create competitive harm.
PAYOUT OF 2021 PSUs
| 36 | PROXY STATEMENT | Hilton |
TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT
TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT Each equity-based award subjects the holder to restrictive covenants, including post-employment covenants not to solicit the Company’s Team Members or customers and not to compete against the Company for 12 months following any termination of employment, and indefinite covenants covering trade secrets, confidentiality and non-disparagement. Under the award agreements, if there is a restrictive covenant violation or the Company determines after termination that grounds for a termination for cause existed, the executive will be required to pay the Company an amount equal to the after-tax proceeds received upon the sale or other disposition or distributions in respect of the equity award and any shares issued in respect thereof. Further, each of these executives’ equity-based awards is subject to the Company’s Clawback Policy (described in the “Clawback Policy” section). Additional provisions are outlined in the table below.
TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT
| Award Type | Provisions for Unvested Awards | | PSUs | •Death or “disability” (as defined in the Incentive Plans) – Prorated portion will immediately vest at target levels(1) •“Change in control” (as defined in the Incentive Plans) – Immediate vesting occurs only if there is a qualifying termination (as described in the applicable award agreement) within 12 months following a change in control (a “double trigger”)(2) •Retirement – Prorated portion will remain outstanding and eligible to vest at the end of the performance period based on actual performance(1)(3) •Other reasons – Forfeited unvested(4) | | Restricted Stock Units | •Death or disability – Immediately vest •Change in control – Immediate vesting occurs only upon a double trigger(2) •Retirement – Continue to vest according to the original vesting schedule(3) •Other reasons – Forfeited unvested(4) | | Stock Options(5) | •Death or disability – Immediately vest and become exercisable •Change in control – Immediate vesting occurs only upon a double trigger(2) •Retirement – Continue to vest according to the original vesting schedule(3) •Other reasons – Forfeited unvested(4) |
TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT
(1)Prorated based on the number of days in the applicable three-year period that have elapsed prior to termination. Beginning with 2024 PSUs, the full award will immediately vest at target levels for termination upon death or disability. (2)Upon a change in control without a qualifying termination event, unvested awards continue to vest according to their original schedule. For PSUs, the number of units subject to each award will be based on actual performance through the most recently completed fiscal quarter prior to the change in control or at a level as determined by the Committee in its good faith discretion. (3)"Retirement” is defined as a termination of employment for any reason (other than for cause when grounds for cause exist or due to death or disability) after having reached age 55 and achieved at least 10 years of service, provided that the grant was made at least 6 months prior to the executive’s retirement. (4)Termination for any other reason generally results in forfeiture of all unvested awards. (5)Upon death or disability, vested options remain exercisable for one year. Upon a double trigger following change in control, vested options remain exercisable for 90 days. Upon retirement, vested options remain exercisable until five years from retirement. Upon termination for cause or a violation of specified restrictive covenants, all vested and unvested options terminate and all other unvested awards are forfeited. Upon termination for other reasons, vested options remain exercisable for 90 days. In no case will options remain exercisable later than the original expiration date.
TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT
| Hilton | PROXY STATEMENT | 37 |
EXECUTIVE COMPENSATION PEER GROUP
EXECUTIVE COMPENSATION PEER GROUP To gain an understanding of current compensation practices and assess the competitiveness of our compensation program, the Committee reviews pay of executives serving in similar positions at peer companies. The external market data reviewed for 2023 included peer group proxy data and broad industry-comparative compensation surveys. The Committee reviews the composition of the peer group on an annual basis in consultation with its independent compensation consultant and considers:
EXECUTIVE COMPENSATION PEER GROUP
| | Industries that attract and retain similar talent | | | Global presence and brand recognition | | | Comparable size based on annual revenue, system-wide revenue (approximately $56 billion(1)), market capitalization, Adjusted EBITDA and number of Team Members |
EXECUTIVE COMPENSATION PEER GROUP
(1)System-wide revenue reflects estimated revenues of franchised properties, in addition to revenues from properties managed, owned or leased by Hilton.
2023 PEER GROUP COMPANIES
2023 PEER GROUP COMPANIES As part of its annual review in August 2023, the Committee evaluated and approved maintaining the existing peer group. The peer group consists of 17 hospitality, travel and global consumer brands and restaurants that have a similar corporate structure, global presence, brand recognition and that compete with the Company for talent. This is the peer group the Committee referenced when determining 2023 base salaries, target annual cash incentives and target LTI for our executive officers.
2023 PEER GROUP COMPANIES
| | | | | Hospitality | Travel | Global Consumer Brands & Restaurants | | Hyatt Hotels Corporation Marriott International, Inc. Wyndham Hotels & Resorts, Inc. | Booking Holdings Inc. Carnival Corporation Expedia Group, Inc. Las Vegas Sands Corporation MGM Resorts International Royal Caribbean Cruises, Ltd. United Airlines Holdings, Inc. Wynn Resorts, Limited | Capital One Financial Corporation McDonald’s Corporation NIKE, Inc. Starbucks Corporation The Walt Disney Company YUM! Brands, Inc. |
2023 PEER GROUP COMPANIES
| 38 | PROXY STATEMENT | Hilton |
PENSION BENEFITS
PENSION BENEFITS Mr. Silcock participates in a defined benefit pension plan, the Hilton U.K. Pension Plan (the “U.K. Pension Plan”), because of his service in the U.K. Mr. Silcock ceased further pensionable service under the U.K. Pension Plan in 2009. See “2023 Pension Benefits” for a description of these defined benefit pension plans.
SEVERANCE PLAN
SEVERANCE PLAN The Committee believes that a carefully structured severance plan is necessary to attract and retain talent. Our severance plan allows executives to focus their attention and energy on making objective business decisions that are in the best interest of stockholders. In addition, the Committee believes that the interests of our stockholders are better protected and enhanced by providing greater certainty regarding executive pay obligations in the context of planning and negotiating any potential corporate transactions. Under the terms of the executive severance plan (the “Severance Plan”) approved by the Committee, if an eligible executive’s employment is terminated by us without “cause,” or if the eligible Team Member terminates his or her employment for “good reason” (each, a “qualifying termination”), then, subject to the eligible Team Member's execution and non-revocation of a release of claims against us, continued compliance with restrictive covenants related to post-employment non-solicitation and non-compete covenants for one year following termination, and indefinite covenants covering confidentiality and non-disparagement, the executive will be eligible to receive a severance payment amount based on their position, base salary and target bonus. Under the terms of the Severance Plan, our NEOs will be eligible to receive a severance payment equal to 2.0 times (2.99 times in the case of Mr. Nassetta) the sum of his or her annual base salary and annual target bonus at the time of termination, paid in a lump sum. In addition, upon a qualifying termination, the NEO will be entitled to certain continued health and welfare benefits, as described under “Potential Payments Upon Termination or Change in Control.” The NEOs will also be entitled to the same level of severance upon a qualifying termination in connection with a change in control except that severance may be reduced if doing so would result in the executive realizing a better after-tax result following the imposition of any applicable golden parachute excise taxes under Internal Revenue Code Section 4999. In addition to the Severance Plan, any compensation and benefits to be made in connection with a separation are determined at the discretion of the Committee and may be based on the executive, his or her position, the nature of the separation and the respective executive’s compliance with specified post-termination restrictive covenants.
SEVERANCE PLAN
| Hilton | PROXY STATEMENT | 39 |
SEVERANCE PLAN
| RISK AND GOVERNANCE |
KEY EXECUTIVE COMPENSATION PRACTICES
| What We Do: | | | | Emphasize long-term performance – Our LTI program is designed to focus executives on long-term stockholder value and emphasize achievement of strategic objectives over the next several years. | | | Engage an independent compensation consultant – The Committee’s consultant does not provide any other services to the Company. | | | Apply double trigger vesting in the event of a change in control – Cash severance benefits are payable and vesting of equity awards is accelerated only upon a “double trigger,” meaning when an executive’s employment is terminated following a change in control. | | | Provide limited perquisites – Our NEOs receive perquisites consistent with industry practices and, in addition, participate in the same Company-wide plans and programs offered to all eligible Team Members. We do not provide club memberships, personal financial or tax advice or private security. | | | Apply a clawback policy – The Committee will recover erroneous incentive compensation paid or awarded based on financial measures that are required to be restated. | | | Evaluate share utilization – The Committee annually reviews share utilization, burn rate and dilution levels resulting from our compensation practices. | | | Establish caps on maximum payouts – The Committee sets maximum amounts that may be payable for annual cash incentive compensation and long-term PSUs. | | | Robust stock ownership guidelines – Our executives have robust stock ownership guidelines in place; our CEO is expected to own 8 times base salary and our NEOs are expected to own 3 times base salary. |
KEY EXECUTIVE COMPENSATION PRACTICES
| What We Do Not Do: | | | | Provide employment agreements (unless required by local law outside the U.S.) or individual change in control agreements for our NEOs – The Committee has determined that employment agreements are not necessary to attract members of our executive team. | | | Allow pledging, hedging or short-sale transactions – Per our Insider Trading Policy, all covered persons (including officers and directors) are prohibited from purchasing Company securities on margin or pledging Company securities as collateral. Further, we do not permit short sales or the purchase or sale of derivative instruments based on the Company’s securities. | | | Reprice or buyout underwater stock options – Our Incentive Plans do not permit the repricing or substitution of underwater stock options except with stockholder approval. Our Incentive Plans also do not permit the grant of stock options with below-market exercise prices, except in connection with certain corporate transactions. | | | Pay dividends or dividend equivalents on any unvested equity awards prior to vesting – Our Incentive Plans and associated award agreements prohibit the payment and delivery of dividends and dividend equivalents on unvested RSUs and PSUs, unless and until the underlying award vests. | | | Provide tax gross-ups – We do not provide tax gross-ups. |
COMPENSATION COMMITTEE REPORT
| Name | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2)(3) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value & Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compensation(3)(5) ($) | Total ($) | | Christopher J. Nassetta President & Chief Executive Officer | 2023 | $1,300,000 | — | $16,312,319 | $5,437,461 | $2,776,998 | — | $729,686 | $26,556,464 | | | 2022 | $1,300,000 | — | $13,705,998 | $4,568,718 | $3,412,500 | — | $545,722 | $23,532,938 | | | 2021 | $1,255,000 | — | $13,706,216 | $4,568,720 | $3,351,563 | — | $403,749 | $23,285,248 | | Kevin J. Jacobs Chief Financial Officer & President, Global Development | 2023 | $990,385 | — | $4,874,852 | $1,624,955 | $1,386,503 | — | $57,226 | $8,933,921 | | | 2022 | $940,625 | — | $4,199,776 | $1,399,976 | $1,543,750 | — | $12,200 | $8,096,327 | | | 2021 | $896,202 | — | $3,522,996 | $1,174,339 | $1,442,000 | — | $40,547 | $7,076,084 | | Christopher W. Silcock(6) President, Global Brands & Commercial Services | 2023 | $705,167 | — | $2,531,573 | $843,869 | $1,020,282 | $51,000 | $258,902 | $5,410,793 | | | 2022 | $611,106 | — | $1,912,153 | $637,380 | $1,013,244 | — | $202,390 | $4,376,273 | | | 2021 | $662,921 | — | $1,204,704 | $401,624 | $1,065,848 | $67,221 | $219,075 | $3,621,393 | | Matthew W. Schuyler Former EVP, Chief Brand Officer | 2023 | $794,068 | — | $2,152,209 | $717,464 | $1,067,745 | — | $80,751 | $4,812,237 | | | 2022 | $764,845 | — | $2,037,811 | $679,323 | $1,207,263 | — | $27,923 | $4,717,165 | | | 2021 | $742,567 | — | $1,919,473 | $639,883 | $1,157,463 | — | $40,833 | $4,500,219 | | Laura A. Fuentes EVP, Chief Human Resources Officer | 2023 | $725,813 | — | $1,640,398 | $546,849 | $1,068,724 | — | $16,950 | $3,998,734 |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE (5)For a description of our perquisites, see “Other Benefits and Perquisites” in the CD&A. Perquisites and other personal benefits for an NEO are excluded if the total value of all such perquisites and personal benefits is less than $10,000. Amounts in the "All Other Compensation" column for 2023 include:
SUMMARY COMPENSATION TABLE
| Name | Company 401(k) Match(a) ($) | Insurance Premiums(b) ($) | Personal Use of Company Aircraft(c) ($) | Executive Physical ($) | Other(d) ($) | Total ($) | | Christopher J. Nassetta | $13,200 | $3,319 | $676,228 | $3,750 | $33,189 | $729,686 | | Kevin J. Jacobs | $13,200 | — | — | $3,750 | $40,276 | $57,226 | | Christopher W. Silcock(6) | — | — | — | — | $258,902 | $258,902 | | Matthew W. Schuyler | — | — | — | — | $80,751 | $80,751 | | Laura A. Fuentes | $13,200 | — | — | $3,750 | — | $16,950 |
SUMMARY COMPENSATION TABLE
(a)Company contributions to the 401(k) for Mr. Nassetta, Mr. Jacobs and Ms. Fuentes. (b)Employer-paid premiums for Mr. Nassetta’s executive life insurance policy for the period of January 1, 2023 through June 10, 2023, the expiration date of the policy. (c)The amount reported reflects incremental costs of $675,259 for personal use of Company and charter aircraft by Mr. Nassetta (and by members of his family and guests). The incremental cost of personal use of Company aircraft is determined by calculating an hourly variable rate (e.g., fuel, catering, certain maintenance costs, landing fees, crew travel and other miscellaneous variable costs) for the aircraft and then multiplying the result by the hours flown for personal use and flight hours for plane repositioning (or “deadhead”) flights associated with personal use of Company aircraft. The amount does not include the fixed costs that do not change based on usage, such as crew salaries and hangar storage costs. In addition, family members and guests of Mr. Nassetta occasionally accompany him on business travel on Company aircraft, for which we incurred $969 of incremental costs attributable to the total catering costs incurred on such flights. Incremental costs for any personal use of charter aircraft reflect the full cost charged to the Company for the charters. (d)Reflects all employer-paid expenses incurred at Company-branded hotels while on personal travel as permitted under our travel perquisite program: Mr. Nassetta (and members of his family) — $33,189; Mr. Jacobs — $40,228; Mr. Silcock — $27,998; and Mr. Schuyler — $80,703. For each stay, we included the full nightly room rate charged by the hotel, associated room taxes and fees, parking, food and beverage charges and other on-site services. For Mr. Jacobs and Mr. Schuyler, this column also includes expenses associated with identity theft protection coverage. For Mr. Silcock and Mr. Schuyler, this column also includes expenses associated with their spouses attending business events. For Mr. Silcock, the amount reflects benefits which are customary for the region: his election to receive cash in lieu of participation in a defined contribution pension plan — $211,550; car allowance — $14,357; and long-term disability coverage — $4,996. (6)Mr. Silcock’s cash compensation (i.e., salary, non-equity incentive plan compensation and all other compensation) is denominated and paid in GBP; the amounts reported above reflect the average exchange rate of 1.24305, 1.23751 and 1.38271 USD per GBP for the years ended December 31, 2023, 2022 and 2021, respectively.
SUMMARY COMPENSATION TABLE
| Hilton | PROXY STATEMENT | 43 |
SUMMARY COMPENSATION TABLE
2023 GRANTS OF PLAN-BASED AWARDS The following table sets forth grants of plan-based awards to the NEOs during the fiscal year ended December 31, 2023.
SUMMARY COMPENSATION TABLE
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(2) (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | | Name | Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Christopher J. Nassetta | Annual Cash Incentive | — | $54,210 | $1,950,000 | $3,900,000 | — | — | — | — | — | — | — | | | RSUs | 3/2/23 | — | — | — | — | — | — | 37,194 | — | — | $5,437,391 | | | Stock Options | 3/2/23 | — | — | — | — | — | — | — | 103,927 | $146.19 | $5,437,461 | | | PSUs | 3/2/23 | — | — | — | 37,194 | 74,389 | 148,778 | — | — | — | $10,874,928 | | Kevin J. Jacobs | Annual Cash Incentive | — | $25,000 | $1,000,000 | $2,000,000 | — | — | — | — | — | — | — | | | RSUs | 3/2/23 | — | — | — | — | — | — | 11,115 | — | — | $1,624,902 | | | Stock Options | 3/2/23 | — | — | — | — | — | — | — | 31,058 | $146.19 | $1,624,955 | | | PSUs | 3/2/23 | — | — | — | 11,115 | 22,231 | 44,462 | — | — | — | $3,249,950 | | Christopher W. Silcock | Annual Cash Incentive(4) | — | $36,142 | $722,834 | $1,445,668 | — | — | — | — | — | — | — | | | RSUs | 3/2/23 | — | — | — | — | — | — | 5,772 | — | — | $843,809 | | | Stock Options | 3/2/23 | — | — | — | — | — | — | — | 16,129 | $146.19 | $843,869 | | | PSUs | 3/2/23 | — | — | — | 5,772 | 11,545 | 23,090 | — | — | — | $1,687,764 | | Matthew W. Schuyler | Annual Cash Incentive | — | $40,000 | $800,000 | $1,600,000 | — | — | — | — | — | — | — | | | RSUs | 3/2/23 | — | — | — | — | — | — | 4,907 | — | — | $717,354 | | | Stock Options | 3/2/23 | — | — | — | — | — | — | — | 13,713 | $146.19 | $717,464 | | | PSUs | 3/2/23 | — | — | — | 4,907 | 9,815 | 19,630 | — | — | — | $1,434,855 | | Laura A. Fuentes | Annual Cash Incentive | — | $36,563 | $731,250 | $1,462,500 | — | — | — | — | — | — | — | | | RSUs | 3/2/23 | — | — | — | — | — | — | 3,740 | — | — | $546,751 | | | Stock Options | 3/2/23 | — | — | — | — | — | — | — | 10,452 | $146.19 | $546,849 | | | PSUs | 3/2/23 | — | — | — | 3,740 | 7,481 | 14,962 | — | — | — | $1,093,647 |
SUMMARY COMPENSATION TABLE
(1)Reflects the possible payouts under the 2023 annual cash incentive program. Amounts reported in the “Threshold” column assume that the NEO only earns the minimum payout for the performance objective that has been assigned the lowest weighting. The actual amounts paid are described in the “Non-Equity Incentive Plan Compensation” column of the SCT. (2)As described in further detail under "LTI Program" and “PSUs Granted in 2023," the PSUs granted were based on four equally weighted metrics, FCF per share, Adjusted EBITDA, NUG CAGR and RPI Growth, and will vest after a three-year period ending on December 31, 2025. Amounts reported in the “Threshold” column assume that 50% of the target PSUs will vest and amounts reported in the “Maximum” column assume that 200% of the target PSUs will vest. (3)Computed in accordance with FASB ASC Topic 718, using the assumptions discussed in Note 15: “Share-Based Compensation” of the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The stock options have an exercise price per share equal to the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The grant date fair value of the PSUs were computed in accordance with FASB ASC Topic 718 based upon the probable outcome of the performance conditions, as described under “PSUs Granted in 2023” as of the grant date. (4)For Mr. Silcock, the annual cash incentive amounts reported above were converted to USD as described under “Base Salary.”
SUMMARY COMPENSATION TABLE
| 44 | PROXY STATEMENT | Hilton |
SUMMARY COMPENSATION TABLE
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table sets forth outstanding equity awards held by our NEOs as of December 31, 2023.
SUMMARY COMPENSATION TABLE
| Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(1)(2) (#) | 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(3) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(2)(4) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3)(4) ($) | | Christopher J. Nassetta | 2/19/14 | 74,977 | — | $45.46 | 2/19/24 | — | — | — | — | | | 2/10/15 | 71,125 | — | $57.99 | 2/10/25 | — | — | — | — | | | 2/18/16 | 114,289 | — | $41.41 | 2/18/26 | — | — | — | — | | | 2/27/17 | 124,007 | — | $58.02 | 2/27/27 | — | — | — | — | | | 3/1/18 | 166,452 | — | $79.35 | 3/1/28 | — | — | — | — | | | 2/28/19 | 204,577 | — | $83.10 | 2/28/29 | — | — | — | — | | | 3/3/20 | 212,796 | — | $93.33 | 3/3/30 | — | — | — | — | | | 3/3/21 | 74,017 | 37,009 | $123.13 | 3/3/31 | — | — | — | — | | | 2/25/22 | 29,773 | 59,547 | $150.67 | 2/25/32 | 15,161(5) | $2,760,666 | 90,968 | $16,564,363 | | | 3/2/23 | — | 103,927 | $146.19 | 3/2/33 | 37,194(5) | $6,772,655 | 111,584 | $20,318,331 | | Kevin J. Jacobs | 2/28/19 | 12,848 | — | $83.10 | 2/28/29 | — | — | — | — | | | 3/3/20 | 29,110 | — | $93.33 | 3/3/30 | — | — | — | — | | | 3/3/21 | 19,025 | 9,513 | $123.13 | 3/3/31 | — | — | — | — | | | 2/25/22 | 9,123 | 18,247 | $150.67 | 2/25/32 | 4,646(5) | $845,990 | 27,876 | $5,075,941 | | | 3/2/23 | — | 31,058 | $146.19 | 3/2/33 | 11,115(5) | $2,023,930 | 33,348 | $6,072,337 | | Christopher W. Silcock | 2/10/15 | 4,986 | — | $57.99 | 2/10/25 | — | — | — | — | | | 2/18/16 | 11,905 | — | $41.41 | 2/18/26 | — | — | — | — | | | 2/27/17 | 15,638 | — | $58.02 | 2/27/27 | — | — | — | — | | | 3/1/18 | 10,513 | — | $79.35 | 3/1/28 | — | — | — | — | | | 2/28/19 | 13,994 | — | $83.10 | 2/28/29 | — | — | — | — | | | 3/3/20 | 15,836 | — | $93.33 | 3/3/30 | — | — | — | — | | | 3/3/21 | 6,506 | 3,254 | $123.13 | 3/3/31 | — | — | — | — | | | 2/25/22 | 4,153 | 8,308 | $150.67 | 2/25/32 | 2,115(5) | $385,120 | 12,692 | $2,311,086 | | | 3/2/23 | — | 16,129 | $146.19 | 3/2/33 | 5,772(5) | $1,051,023 | 17,318 | $3,153,435 | | Matthew W. Schuyler | 2/19/14 | 18,744 | — | $45.46 | 2/19/24 | — | — | — | — | | | 2/10/15 | 17,442 | — | $57.99 | 2/10/25 | — | — | — | — | | | 2/18/16 | 27,556 | — | $41.41 | 2/18/26 | — | — | — | — | | | 2/27/17 | 29,565 | — | $58.02 | 2/27/27 | — | — | — | — | | | 3/1/18 | 19,782 | — | $79.35 | 3/1/28 | — | — | — | — | | | 2/28/19 | 28,462 | — | $83.10 | 2/28/29 | — | — | — | — | | | 3/3/20 | 28,935 | — | $93.33 | 3/3/30 | — | — | — | — | | | 3/3/21 | 10,366 | 5,184 | $123.13 | 3/3/31 | — | — | — | — | | | 2/25/22 | 4,426 | 8,855 | $150.67 | 2/25/32 | 2,254(5) | $410,431 | 13,526 | $2,462,949 | | | 3/2/23 | — | 13,713 | $146.19 | 3/2/33 | 4,907(5) | $893,516 | 14,724 | $2,681,093 | | Laura A. Fuentes | 2/10/15 | 3,296 | — | $57.99 | 2/10/25 | — | — | — | — | | | 2/18/16 | 5,298 | — | $41.41 | 2/18/26 | — | — | — | — | | | 2/27/17 | 7,936 | — | $58.02 | 2/27/27 | — | — | — | — | | | 3/1/18 | 4,888 | — | $79.35 | 3/1/28 | — | — | — | — | | | 2/28/19 | 6,226 | — | $83.10 | 2/28/29 | — | — | — | — | | | 3/3/20 | 6,724 | — | $93.33 | 3/3/30 | — | — | — | — | | | 3/3/21 | 5,005 | 2,504 | $123.13 | 3/3/31 | — | — | — | — | | | 2/25/22 | 3,003 | 6,009 | $150.67 | 2/25/32 | 1,530(5) | $278,598 | 9,180 | $1,671,586 | | | 3/2/23 | — | 10,452 | $146.19 | 3/2/33 | 3,740(5) | $681,017 | 11,222 | $2,043,414 |
SUMMARY COMPENSATION TABLE
(1)Stock options granted in 2014 through 2017 vested in three equal annual installments beginning the following February, on approximately the first anniversary of the grant date. Stock options granted in 2018 through 2023 vest in three equal annual installments beginning on the following March 3, which is approximately the first anniversary of the grant date. (2)For information on vesting upon specified termination events or a change in control, see “LTI Program” and “Potential Payments Upon Termination or Change in Control.” (3)Amounts reported are based on the NYSE closing price of our common stock of $182.09 on December 29, 2023, the last trading day of the year, multiplied by the number of outstanding shares. (4)PSUs vest according to four equally weighted performance metrics (FCF per share, Adjusted EBITDA, NUG CAGR and RPI Growth; defined under “PSUs Granted in 2023") at the end of the performance periods. In the table above, the number and market value of the PSUs reported reflect the following achievement based on the Company’s performance as of December 31, 2023: for 2022 PSUs, Adjusted EBITDA and FCF per share reflect maximum and NUG CAGR and RPI Growth reflect target; for 2023 PSUs, Adjusted EBITDA and FCF per share reflect maximum and NUG CAGR and RPI Growth reflect target. The actual number of units that will be distributed is not yet determinable. (5)RSUs granted in 2022 and 2023 vest in two equal annual installments beginning on the following March 3, which is approximately the first anniversary of the grant date.
SUMMARY COMPENSATION TABLE
| Hilton | PROXY STATEMENT | 45 |
SUMMARY COMPENSATION TABLE
2023 OPTION EXERCISES AND STOCK VESTED The following table provides information regarding options that were exercised and shares that vested during 2023 for our NEOs.
SUMMARY COMPENSATION TABLE
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(1) ($) | Number of Shares Acquired on Vesting(2) (#) | Value Realized on Vesting(3) ($) | | Christopher J. Nassetta | — | — | 182,134 | $32,001,309 | | Kevin J. Jacobs | — | — | 47,564 | $8,336,051 | | Christopher W. Silcock | 4,685 | $567,280 | 16,792 | $2,928,380 | | Matthew W. Schuyler | — | — | 25,638 | $4,500,982 | | Laura A. Fuentes | — | — | 12,822 | $2,238,683 |
SUMMARY COMPENSATION TABLE
(1)Reflects the value realized (market price less the exercise price) upon exercising the stock options. (2)Includes shares received from the vesting of RSUs granted in 2021 and 2022 and vested on March 3, 2023. The performance awards granted in 2021 vested on December 31, 2023 and are described under “Payout of 2021 PSUs.” The common stock underlying the 2021 PSUs were issued to our NEOs in the following amounts and market values based on our NYSE closing price of $203.96 on February 28, 2024, the date the Board certified performance achievement and the PSUs settled: 148,420 shares and $30,271,743 for Mr. Nassetta; 38,150 shares and $7,781,074 for Mr. Jacobs; 13,046 shares and $2,660,862 for Mr. Silcock; 20,786 shares and $4,239,513 for Mr. Schuyler; and 10,038 shares and $2,047,350 for Ms. Fuentes. (3)Amounts reported are based on the closing price of our common stock on the NYSE on the vesting date. 2023 PENSION BENEFITS The table below provides information as of December 31, 2023, for our NEO who participates in a defined benefit pension plan and ceased further pensionable service under the plan in 2009.
SUMMARY COMPENSATION TABLE
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1) ($) | Payments During Last Fiscal Year ($) | | Christopher J. Nassetta | | — | — | — | | Kevin J. Jacobs | | — | — | — | | Christopher W. Silcock | U.K. Pension Plan(2) | 5 | $343,000 | — | | Matthew W. Schuyler | | — | — | — | | Laura A. Fuentes | | — | — | — |
SUMMARY COMPENSATION TABLE
(1)For discussion on the U.K. Pension Plan and assumptions used in the actuarial present value, refer to Note 14: "Employee Benefit Plans" of the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (2)The U.K. Pension Plan is a defined benefit pension plan in the U.K., for which benefit payments are payable monthly upon retiring in accordance with the terms of the plan. The funds are invested through a trustee, who has full investment discretion. Mr. Silcock ceased pensionable service in the U.K. Pension Plan in 2009, and has a preserved pension based on his pensionable service and final pensionable salary at that time. Mr. Silcock has not contributed to the plan since then and the only increases applied to his benefit have been annual statutory increases. The purpose of the U.K. Pension Plan is to provide a retirement benefit based on U.K. market practice. The U.K. Pension Plan does not provide special policies such as granting extra years of credited service, however, it provides tax advantages such as tax relief on Team Member contributions and a tax-free cash payment at retirement.
SUMMARY COMPENSATION TABLE
| 46 | PROXY STATEMENT | Hilton |
SUMMARY COMPENSATION TABLE
2023 NONQUALIFIED DEFERRED COMPENSATION The table below provides information as of December 31, 2023, for those NEOs who have a balance in the EDCP.
SUMMARY COMPENSATION TABLE
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY(1) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(2) ($) | | Christopher J. Nassetta | — | — | $13,658 | — | $241,981 | | Kevin J. Jacobs | — | — | — | — | — | | Christopher W. Silcock | — | — | — | — | — | | Matthew W. Schuyler | — | — | — | — | — | | Laura A. Fuentes | — | — | — | — | — |
SUMMARY COMPENSATION TABLE
(1)The amount in this column is not reported as compensation for fiscal year 2023 in the SCT since it does not reflect above-market or preferential earnings. Deferrals may be allocated among investment options that generally mirror the investment options available under our qualified 401(k) plan. Of the available investment options, the one-year rate of return during 2023 ranged from 2.84% to 45.27%. (2)The EDCP is frozen and accordingly, Mr. Nassetta made no contributions during fiscal years 2021, 2022 or 2023 and, therefore, no amounts in this column have previously been reported in the SCT. The EDCP was frozen as of December 31, 2018. While no new participants have been permitted to enter the plan and no new deferrals have been contributed since that date, participants may continue to make investment choices for their existing deferred compensation balances under the plan. Under our EDCP, specified eligible Team Members were previously permitted to defer up to 80% of their annual salary and up to 100% of their bonus. Contributions to the EDCP consisted solely of participants’ elective deferral contributions and the Company did not provide matching contributions. Eligible Team Members are permitted to make individual investment elections that will determine the rate of return on their deferral amounts. Participants may change their investment elections at any time. Deferrals are only deemed to be invested in the investment options selected. Participants have no ownership interest in any of the funds as investment elections are used only as an index for crediting gains or losses to participants’ accounts. The investment options consist of a variety of well-known mutual funds including certain non-publicly traded mutual funds available through variable insurance products. Investment gains or losses in the funds are credited to the participants’ accounts daily, net of investment option related expenses. The EDCP does not provide any above-market returns or preferential earnings to participants, and the deferrals and their earnings are always 100% vested. Participants were permitted to elect to receive in-service distributions of such amounts at the time they made their deferral elections. In addition, upon a showing of financial hardship due to death, illness, accident or similar extraordinary or unforeseeable circumstances, participants may be allowed to access funds in their deferred compensation account before they otherwise would have been eligible. Each participant made two payout elections, one in the case of termination and one in the case of retirement. Benefits can generally be received either as a lump sum payment or in installments over a period not to exceed 20 years in the case of retirement, 5 years in the case of termination and 5 years for in-service distributions. In the event of a change in control, 100% of the value of the eligible Team Members’ deferred compensation accounts will be distributed.
SUMMARY COMPENSATION TABLE
| Hilton | PROXY STATEMENT | 47 |
SUMMARY COMPENSATION TABLE
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following table describes the potential payments and benefits that would have been payable to our NEOs under existing plans assuming a termination of employment on December 31, 2023. The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs. Distributions of plan balances that would be made are set forth in the “2023 Nonqualified Deferred Compensation” table. Because the disclosures in the table assume the occurrence of a termination as of a particular date and under a particular set of circumstances and therefore make a number of important assumptions, the actual amount to be paid to each of our NEOs upon a termination may vary significantly from the amounts included herein. Factors that could affect these amounts include the timing during the year of any such event, the continued availability of benefit policies at similar prices and the type of termination event that occurs.
SUMMARY COMPENSATION TABLE
| Name | Qualifying Termination(1) ($) | Qualifying Termination Within 12 Months Following CIC ($) | Death or Disability(2) ($) | | Christopher J. Nassetta | | | | | Cash Severance(1) | $9,717,500 | $9,717,500 | $1,950,000 | | Equity Awards(3) | — | $47,705,070 | $29,190,262 | | Continuation of Benefits(4) | $34,400 | $34,400 | — | | Outplacement Services(5) | $30,000 | $30,000 | — | | Other Benefit(6) | $150,000 | $150,000 | $150,000 | | Total Value of Benefits | $9,931,900 | $57,636,970 | $31,290,262 | | Kevin J. Jacobs | | | | | Cash Severance(1) | $4,000,000 | $4,000,000 | $1,000,000 | | Equity Awards(3) | — | $14,318,049 | $8,723,079 | | Continuation of Benefits(4) | $23,261 | $23,261 | — | | Outplacement Services(5) | $30,000 | $30,000 | — | | Other Benefit(6) | $115,385 | $115,385 | $115,385 | | Total Value of Benefits | $4,168,646 | $18,486,695 | $9,838,464 | | Christopher W. Silcock(7) | | | | | Cash Severance(1) | $2,891,336 | $2,891,336 | $722,834 | | Equity Awards(3) | — | $6,941,415 | $4,195,281 | | Continuation of Benefits(4) | $6,372 | $6,372 | — | | Outplacement Services(5) | $30,000 | $30,000 | — | | Other Benefit(6) | — | — | — | | Total Value of Benefits | $2,927,708 | $9,869,123 | $4,918,115 | | Matthew W. Schuyler | | | | | Cash Severance(1) | $3,200,000 | $3,200,000 | $800,000 | | Equity Awards(3) | — | $6,649,036 | $4,069,914 | | Continuation of Benefits(4) | $29,608 | $29,608 | — | | Outplacement Services(5) | $30,000 | $30,000 | — | | Other Benefit(6) | $92,308 | $92,308 | $92,308 | | Total Value of Benefits | $3,351,916 | $10,000,952 | $4,962,222 | | Laura A. Fuentes | | | | | Cash Severance(1) | $2,925,000 | $2,925,000 | $731,250 | | Equity Awards(3) | — | $4,732,639 | $2,867,743 | | Continuation of Benefits(4) | $21,459 | $21,459 | — | | Outplacement Services(5) | $30,000 | $30,000 | — | | Other Benefit(6) | $75,938 | $75,938 | $75,938 | | Total Value of Benefits | $3,052,397 | $7,785,036 | $3,674,931 |
SUMMARY COMPENSATION TABLE
| 48 | PROXY STATEMENT | Hilton |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (1)For purposes of the cash severance amounts in the table above, a “qualifying termination” means (x) as defined under the Severance Plan, a termination of employment either by the Company without “cause” or by the executive for “good reason” and (y) as defined under the Incentive Plans, a termination by the Company without “cause.” An executive is not deemed to have experienced a qualifying termination as a result of (a) his or her death or disability or (b) solely as a result of a change in control. Under the Severance Plan, whether or not in connection with a change in control, each NEO would have been entitled to receive a cash severance amount equal to 2.0 times (2.99 times in the case of Mr. Nassetta) the sum of the executive’s annual base salary and annual cash incentive award payable at target, each as in effect at the date of termination. If the employment of the NEO was terminated due to death or disability, such executive would have been entitled to receive a prorated bonus. Amounts reported under “Death or Disability” for each NEO reflect each NEO’s target annual bonus for the year ended December 31, 2023. (2)In the event of death of an NEO, in addition to amounts reported in the table above, each NEO will receive benefits from third-party payors under our employer-paid premium life insurance plans. Mr. Silcock is eligible for four times his base salary at death. All of our other NEOs are eligible for one times their regular annual eligible wages at death. Therefore, if such benefits were triggered for the NEOs on December 31, 2023 under our life insurance plans the legally designated beneficiary(ies) of each NEO would have received the following amounts: Mr. Nassetta — $2,500,000; Mr. Jacobs — $2,392,000; Mr. Silcock — $2,467,345; Mr. Schuyler — $1,927,000; and Ms. Fuentes — $1,775,000. (3)Amounts represent the value of the acceleration of any unvested equity awards, assuming the acceleration occurred on December 31, 2023 and based on our NYSE closing price of $182.09 on December 29, 2023, the last trading day of the year. Provisions for unvested awards are discussed in further detail under “Treatment of LTI Awards Upon Termination, Change in Control ("CIC") or Retirement.” •PSUs: If the NEO’s employment terminates as a result of death or disability, a prorated portion of the PSUs then outstanding and eligible to vest will immediately vest at target levels, with such proration based on the number of days in the performance period that have elapsed. Upon a double trigger change in control event, the PSUs then outstanding and eligible to vest will immediately vest based on actual performance through the most recently completed fiscal quarter or at a level as determined by the Committee in its good faith discretion. The amounts reported in the table above for double trigger vesting are based on the Company’s performance as of December 31, 2023. •RSUs: Upon a double trigger following a change in control or due to the executive’s death or disability, all unvested RSUs will immediately vest. •Stock options: Upon a double trigger following a change in control or due to the executive’s death or disability, all unvested options will immediately vest and become exercisable. In the table above, amounts reported reflect the “spread,” or difference between the exercise price and closing price as of December 31, 2023. •Amounts in the table above do not include accrued dividends on unvested equity awards. Accrued dividends as of December 31, 2023 were approximately: $129,809 for Mr. Nassetta; $39,396 for Mr. Jacobs; $18,897 for Mr. Silcock; $18,459 for Mr. Schuyler; and $13,081 for Ms. Fuentes. (4)Under the Severance Plan, upon a qualifying termination, each NEO is entitled to continued healthcare coverage in an amount equal to the excess of the cost of the coverage over the amount that the executive would have had to pay if the executive remained employed for 12 months following the date of termination. In addition, upon a qualifying termination, an NEO who received life insurance coverage prior to the qualifying termination may be entitled to receive a cash payment equal to the premiums required to continue such coverage for 12 months following the termination. Amounts reported assume 2023 rates. (5)Under the Severance Plan, upon a qualifying termination, each NEO is entitled to outplacement services for a period of 12 months following the date of termination. Amounts in the table above assume that the cost to the Company for these outplacement services would be $30,000 for each NEO. (6)Amounts shown represent accrued but unused vacation days. (7)The non-equity award dollar amounts reported above for Mr. Silcock were converted to USD as described under “Base Salary.” As required under U.K. law, we are party to an employment agreement with Mr. Silcock. Pursuant to the agreement, Mr. Silcock is entitled to six months’ notice of the termination of his employment. His agreement does not otherwise provide for any severance payments or benefits, and we would expect that any such payments and benefits would be paid pursuant to the Severance Plan in the event his employment is terminated.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Hilton | PROXY STATEMENT | 49 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
PAY RATIO For the fiscal year ended December 31, 2023, we estimate that the ratio of the annual total compensation of our CEO, which was $26,571,986(1), to the annual total compensation of our median employee, which was $48,435(2), was 549:1. In order to identify a new median employee for 2023, as required by the SEC rules, we used the methodology described below: •As of October 1, 2023, the date chosen for identifying the median employee, we collected data for all employees globally and used base pay as our consistently applied compensation measure. For hourly workers, we calculated annual base pay based on a reasonable estimate of hours worked during 2023, and we used salary levels for salaried employees. We annualized pay for all permanent employees who were employed for less than the full fiscal year. Consistent with SEC guidance, we used reasonable estimates to determine the base pay for a small portion of our employee population. •Once base pay information was gathered for the workforce, we identified employees within a narrow range of the estimated median and then employed statistical sampling to select the median employee from within that range. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules and the methodology described above. The SEC allows companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. (1)For purposes of the pay ratio disclosure, the CEO’s annual total compensation includes the amount reported in the “Total” column of the SCT, plus the CEO’s Company-paid healthcare costs. (2)The median employee’s annual total compensation includes the median employee’s Company 401(k) match and Company-paid healthcare costs, as applicable.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| 50 | PROXY STATEMENT | Hilton |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
PAY VERSUS PERFORMANCE The following table presents summary information regarding the Compensation Actually Paid ("CAP") to our NEOs, total shareholder returns and financial performance metrics for the fiscal years indicated. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act and does not necessarily reflect value actually realized or how our Compensation Committee evaluates compensation decisions in light of company or individual performance. For a discussion of how our Compensation Committee seeks to align pay with performance when making compensation decisions, refer to our CD&A beginning on page 23.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO(1) ($) | Compensation Actually Paid to CEO(1)(2) ($) | Average Summary Compensation Table Total for Non-CEO NEOs(1) ($) | Average Compensation Actually Paid to Non-CEO NEOs(1)(2) ($) | Total Shareholder Return ($) | Peer Group Total Shareholder Return(3) ($) | Net Income (Loss) ($, in millions) | Adjusted EBITDA(4) ($, in millions) | | 2023 | $26,556,464 | $56,800,036 | $5,788,921 | $10,477,589 | $165.81 | $111.92 | $1,151 | $3,089 | | 2022 | $23,532,938 | $8,350,685 | $5,390,298 | $3,187,416 | $114.61 | $67.29 | $1,257 | $2,599 | | 2021 | $23,285,248 | $78,651,629 | $4,824,360 | $12,470,862 | $140.95 | $88.83 | $407 | $1,629 | | 2020 | $55,870,639 | $19,725,498 | $8,341,620 | $3,734,772 | $100.54 | $74.12 | ($720) | $842 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
(1)Mr. Nassetta (our CEO), Mr. Jacobs, Mr. Schuyler and Mr. Silcock are included in each of the covered years; Ms. Fuentes is included in 2023; Ms.Campbell (former NEO) is included in 2020 through 2022; Mr. Carter (former NEO) is included in 2020. (2)The following table details the adjustments to the SCT totals to determine CAP for the year ended December 31, 2023 (the Covered Year):
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO | Average Non-CEO NEOs | | SCT Total | $26,556,464 | $5,788,921 | | Less: Grant Date Fair Value of Equity Awards in SCT | ($21,749,780) | ($3,733,042) | | Less: Change in Pension Value in SCT | — | ($12,750) | | Add: Year-End Fair Value of Outstanding and Unvested Equity Awards Granted in Covered Year(a)(b) | $29,392,789 | $5,044,838 | | Add: Change in Fair Value from the End of the Prior Fiscal Year of Equity Awards Vested in Covered Year as of Vesting Date (Granted in Prior Fiscal Years)(a)(b) | $13,588,031 | $1,869,606 | | Add: Change in Fair Value from the End of the Prior Fiscal Year of Outstanding and Unvested Equity Awards as of Covered Year End (Granted in Prior Fiscal Years)(a)(b) | $9,012,532 | $1,520,016 | | Less: Prior Year Value of Equity Awards that Failed to Meet Vesting Conditions during Covered Year | — | — | | Compensation Actually Paid | $56,800,036 | $10,477,589 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
(a)For stock options, the fair values were determined using the Black Scholes-Merton option-pricing model using the assumptions as of the vesting dates or year-end for the year-ended December 31, 2023 as included in the table below.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Valuation Date Stock Price | $147.58 - $182.09 | | Expected Volatility | 27.77% - 34.08% | | Dividend Yield | 0.37% - 0.43% | | Risk-Free Rate | 3.75% - 4.40% | | Expected Term (in Years) | 3.5 - 5.2 | | Fair Value Per Stock Option | $49.43 - $79.07 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Expected volatility is estimated using a blended approach of historical and implied volatility. Dividend yields are based on Hilton's expected quarterly dividend and the three-month average stock price. Risk-free rates are based on the yields of U.S. Department of Treasury instruments with similar expected terms. Expected terms are generally estimated based on the midpoint of the remaining time to vest and the contractual terms of the stock options, consistent with the original approach used at grant, and taking into account the circumstances of the grant at the measurement date and other relevant factors under GAAP. The exercise price of the stock options that were granted during the covered year is $146.19. (b)For PSUs and RSUs, the fair values are based on the closing price of our common stock on the NYSE on the vesting dates or year-end, as applicable. For unvested PSUs, fair values were based upon management's best estimate of the projected achievement of our performance metrics as of year-end. For vested PSUs, fair value as of the vesting date reflects the valuation described in the "Option Exercises and Stock Vested" table. (3)Reflects the Standard and Poor's 500 Hotels, Resorts & Cruise Lines Index ("S&P Hotels Index"). (4)Adjusted EBITDA is calculated as set forth in "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. See Annex A for additional information and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Hilton | PROXY STATEMENT | 51 |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The illustrations that follow present the relationships between: (i) CAP and TSR, (ii) CAP and net income, (iii) CAP and Adjusted EBITDA and (iv) TSR and Peer Group TSR, as disclosed in the table above. The changes in CAP to our CEO were primarily driven by our stock price, which increased 44% in 2023 from 2022, declined 19% in 2022 from 2021 and increased 40% in 2021 from 2020, as well as our YOY changes in the projected achievement of our PSUs, which, on average, declined during 2020 and increased in 2021 through 2023. Further, our PSUs are based on management's best estimate of the projected achievement of our performance metrics at the end of each performance period and therefore may not consistently correlate with the Company's financial performance in the respective covered year. The tabular list that follows indicates the performance measures that we believe represent the most important measures we use to link CAP to company performance for the most recently completed fiscal year:
PAY VERSUS PERFORMANCE
| Adjusted EBITDA | | FCF Per Share | | Net Unit Growth | | RevPAR Index | | Stock Price |
PAY VERSUS PERFORMANCE
| 52 | PROXY STATEMENT | Hilton |
PAY VERSUS PERFORMANCE
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the 2023 fiscal year, the members of the Compensation Committee were Ms. Healey, Ms. McHale and Mr. Steenland, none of whom was, during the fiscal year, an officer or employee of the Company and none of whom was formerly an officer of the Company. During 2023, none of our executive officers served as a director or member of the Compensation Committee (or other committee serving an equivalent function) of any other entity whose executive officers served on our Compensation Committee or our Board. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table provides certain information about common stock that may be issued under our existing equity compensation plans. The only plan pursuant to which the Company may grant new equity-based awards is the Hilton 2017 Omnibus Incentive Plan, which replaced the Company's 2013 Omnibus Incentive Plan. The number of securities to be issued upon exercise of outstanding options, warrants and rights reflected in the table below includes shares underlying equity-based awards granted, and that remained outstanding as of December 31, 2023 under the equity compensation plans. Additionally, the number of securities remaining available for future issuance under equity compensation plans also includes securities available for issuance pursuant to the 2019 Employee Stock Purchase Plan.
PAY VERSUS PERFORMANCE
| | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price per share of outstanding options | Number of securities remaining available for future issuance under equity compensation plans | | Equity compensation plans approved by stockholders | 5,574,998 (1) | $94.50 | 13,653,750 (2) |
PAY VERSUS PERFORMANCE
(1)Includes shares issuable upon exercise of stock options and 2,473,176 shares that may be issued upon the vesting of certain LTI awards. The number of shares to be issued in respect of performance shares has been calculated based on the assumption that the maximum levels of performance applicable to the performance shares will be achieved. The RSUs and performance shares cannot be exercised for consideration. (2)Consists of 10,444,559 securities remaining available for issuance under the 2017 Omnibus Incentive Plan and 3,209,191 securities remaining available for issuance pursuant to the 2019 Employee Stock Purchase Plan, including shares subject to purchase during the current purchase period.
PAY VERSUS PERFORMANCE
| Hilton | PROXY STATEMENT | 53 |
PAY VERSUS PERFORMANCE
OWNERSHIP OF SECURITIES The following table sets forth information regarding the beneficial ownership of shares of our common stock as of March 22, 2024 by (1) each person known to us to beneficially own more than 5% of our outstanding common stock, (2) each of our directors and named executive officers and (3) all of our directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. Unless otherwise noted, voting power and investment power in the shares of our common stock beneficially owned by our directors and executive officers is exercisable solely by the named individual.
PAY VERSUS PERFORMANCE
| Name | Amount and Nature of Beneficial Ownership | Percentage of Common Stock Outstanding | | Principal Stockholders | | | | The Vanguard Group(1) | 25,386,450 | 10.1 | | BlackRock, Inc.(2) | 18,189,171 | 7.2 | | Directors and Named Executive Officers | | | | Christopher J. Nassetta(3)(4) | 4,515,265 | 1.8 | | Jonathan D. Gray(5)(6) | 737,992 | * | | Charlene T. Begley(6) | 12,549 | * | | Chris Carr(6) | 5,834 | * | | Melanie L. Healey(6) | 11,782 | * | | Raymond E. Mabus, Jr.(6) | 12,279 | * | | Judith A. McHale(6) | 20,251 | * | | Elizabeth A. Smith(6) | 20,251 | * | | Douglas M. Steenland(6) | 26,246 | * | | Laura A. Fuentes(4) | 58,733 | * | | Kevin J. Jacobs(4)(7) | 395,547 | * | | Matthew W. Schuyler(4) | 456,855 | * | | Christopher W. Silcock(4) | 156,244 | * | | Directors and Executive Officers as a group (14 persons)(8) | 6,429,827 | 2.5 |
PAY VERSUS PERFORMANCE
*Represents less than 1%. (1)As reported in a Schedule 13G/A filed on March 11, 2024. The Vanguard Group has shared voting power over 327,562 shares of our common stock, sole dispositive power over 24,290,177 shares of our common stock and shared dispositive power over 1,096,273 shares of our common stock. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. (2)As reported in a Schedule 13G/A filed on January 26, 2024. BlackRock, Inc. has sole voting power over 16,618,656 shares of our common stock and sole dispositive power over 18,189,171 shares of our common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. (3)Includes 801,716 shares of common stock held by Harwood Road LLC, a limited liability company. A revocable living trust, of which Mr. Nassetta is the trustee and a beneficiary, serves as the managing member of Harwood Road LLC. 99% of the economic interests in the limited liability company are held by a family trust for the benefit of Mr. Nassetta’s children and the remaining 1% is held by the aforementioned living trust. (4)Includes shares underlying vested options as follows: Mr. Nassetta: 1,098,460; Ms. Fuentes: 51,367; Mr. Jacobs: 99,094; Mr. Schuyler: 180,715; and Mr. Silcock: 96,315. (5)Includes 731,666 shares held directly by The Gray Foundation over which Mr. Gray may be deemed to have investment and voting power. Mr. Gray does not have any economic interest in the shares held by The Gray Foundation. (6)Includes fully vested DSUs and dividend equivalents that settle on the earlier of a termination for any reason or a change in control as follows: Ms. Begley: 12,549; Mr. Carr: 5,817; Mr. Gray: 6,326; Ms. Healey: 11,782; Mr. Mabus: 11,579; Ms. McHale: 18,085; Ms. Smith: 18,085; and Mr. Steenland: 18,085. (7)Amounts shown for Mr. Jacobs include 99,134 shares of common stock held by grantor retained annuity trusts for which Mr. Jacobs serves as trustee and 35,863 shares of common stock held by a trust for which Mr. Jacobs' wife serves as trustee. (8)Includes 1,525,951 shares underlying vested options held by our executive officers and 102,307 fully vested DSUs and dividend equivalents held by our directors.
PAY VERSUS PERFORMANCE
| 54 | PROXY STATEMENT | Hilton |
PAY VERSUS PERFORMANCE
TRANSACTIONS WITH RELATED PERSONS Our Board of Directors recognizes that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). Our Board has adopted a written policy on transactions with related persons that is in conformity with the requirements for issuers having publicly-held common stock listed on the NYSE. Our related person transaction policy requires that a “related person” (as defined in Item 404(a) of Regulation S-K, which includes security holders who beneficially own more than 5% of our common stock) must promptly disclose to our General Counsel any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) and all material facts with respect thereto. The General Counsel will then promptly communicate that information to our Board or a duly authorized committee of the Board (currently the Audit Committee). No related person transaction will be executed without the approval or ratification of our Board or a duly authorized committee of the Board. Among the factors to be considered are the related person's interest in the transaction, the approximate dollar value of both the transaction and the related person's interest, whether the transaction is in the ordinary course of business of the Company, whether the terms of the transaction are no less favorable than could have been reached with an unrelated third party, and the purpose and potential benefits of the transaction. It is our policy that directors interested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest. Each of the transactions described below complies with our policy on transactions with related persons.

DEF 14A of Hilton Worldwide Holdings Inc.

EXECUTIVE COMPENSATION

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024

COMPENSATION COMMITTEE

ANNUAL COMPENSATION PROGRAM

ANNUAL COMPENSATION PROGRAM

COMPENSATION OF DIRECTORS

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

DIRECTOR COMPENSATION FOR 2023

REPORT OF THE AUDIT COMMITTEE

REPORT OF THE AUDIT COMMITTEE

ROLES IN MAKING COMPENSATION DECISIONS

EXECUTIVE COMPENSATION PROGRAM OVERVIEW & PAY FOR PERFORMANCE

PERFORMANCE-BASED INCENTIVES WITH RIGOROUS TARGETS

ANNUAL CASH INCENTIVE PROGRAM

TARGET SETTING FOR ANNUAL CASH INCENTIVE PROGRAM

2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM

2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM

2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM

2023 TARGETS FOR ANNUAL CASH INCENTIVE PROGRAM

2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM

2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM

2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM

2023 PERFORMANCE OBJECTIVES FOR ANNUAL CASH INCENTIVE PROGRAM

2023 PERFORMANCE RESULTS FOR ANNUAL CASH INCENTIVE PROGRAM

Financial Performance Measure Results

Financial Performance Measure Results

Non-Financial Performance Measure Results

Non-Financial Performance Measure Results

LTI PROGRAM

2023 LTI TARGETS

2023 LTI TARGETS

2023 LTI TARGETS

2023 LTI GRANTS

2023 LTI GRANTS

2023 LTI GRANTS

TARGET SETTING FOR PSUs

TARGET SETTING FOR PSUs

PSUs GRANTED IN 2023

PSUs GRANTED IN 2023

PSUs GRANTED IN 2023

PSUs GRANTED IN 2023

PAYOUT OF 2021 PSUs

PAYOUT OF 2021 PSUs

PAYOUT OF 2021 PSUs

PAYOUT OF 2021 PSUs

TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT

TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT

TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT

TREATMENT OF LTI AWARDS UPON TERMINATION, CHANGE IN CONTROL ("CIC") OR RETIREMENT

EXECUTIVE COMPENSATION PEER GROUP

EXECUTIVE COMPENSATION PEER GROUP

EXECUTIVE COMPENSATION PEER GROUP

2023 PEER GROUP COMPANIES

2023 PEER GROUP COMPANIES

2023 PEER GROUP COMPANIES

PENSION BENEFITS

SEVERANCE PLAN

SEVERANCE PLAN

SEVERANCE PLAN