Sunstone Hotel Investors, Inc. (NYSE:SHO-F) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Sunstone Hotel Investors, Inc. (NYSE:SHO-F) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

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On February 19, 2019, the Compensation Committee of the Board of Directors of Sunstone Hotel Investors, Inc. (the “Company”) promoted David M. Klein to Executive Vice President – General Counsel.In connection with the promotion, Mr. Klein’s base salary was adjusted to $354,000, effective retroactively to January 1, 2019, and he will be eligible to receive (i) an annual cash performance bonus based on the attainment of performance goals determined by the Company with a threshold level equal to 70% of base salary, a target level equal to 105% of base salary, and a high level equal to 140% of base salary (although no minimum bonus is guaranteed and any bonus may equal zero in any given year); and (ii) an annual equity award opportunity with a threshold level equal to 125% of base salary, a target level equal to 175% of base salary, and a high level equal to 225% of base salary (although no minimum equity award is guaranteed and the Compensation Committee may decide to not grant Mr. Klein an equity award in any given year).

On February 19, 2019, the Compensation Committee of the Board of Directors of the Company approved a 2019 cash bonus program (the “2019 Program”) applicable to its named executive officers, including its chief executive officer (“CEO”), John V. Arabia, and its executive vice presidents (“EVP”), Bryan A. Giglia, Marc A. Hoffman, Robert C. Springer and David M. Klein. Prior to its approval, the Compensation Committee engaged in a review of its incentive compensation program with the assistance of its independent compensation consultant, FPL Associates.

Under the 2019 Program, the executives will be eligible to earn cash bonuses based on the Company’s achievement in 2019 of nine performance goals relating to (i) one-, three-, and five- year relative total stockholder return; (ii) one, three-, and five- year absolute total stockholder return; (iii) Adjusted Funds From Operations (a supplemental non-GAAP financial measure defined in the Company’s Annual Report on Form 10-K); (iv) ratio of debt to undepreciated book value of assets; and (v) comparable revenue per available room (“RevPAR”) growth compared to 2018.Each executive’s cash bonus will also be based on the executive’s achievement of individual performance goals, which include but are not limited to, individual department objectives, the advancement of the Company’s ownership of Long-Term Relevant Real Estate®, and the advancement of various environmental, social and governance initiatives (although no minimum bonus is guaranteed and any bonus may equal zero in any given year).In determining each executive’s bonus under the 2019 Program, the goals will be weighted as follows for the CEO and EVP level executives (percentages rounded to the nearest tenth):

CEO

EVP

Goal #1

One Year Relative Total Stockholder Return

7.1%

6.7%

Goal #2

Three Year Relative Total Stockholder Return

7.1%

6.7%

Goal #3

Five Year Relative Total Stockholder Return

7.1%

6.7%

Goal #4

One Year Absolute Total Stockholder Return

7.1%

6.7%

Goal #5

Three Year Absolute Total Stockholder Return

7.1%

6.7%

Goal #6

Five Year Absolute Total Stockholder Return

7.1%

6.7%

Goal #7

AFFO

21.3%

20.0%

Goal #8

Debt to Undepreciated Book Value

17.0%

16.0%

Goal #9

RevPAR Growth

4.3%

4.0%

Individual Objective Weighting

15.0%

20.0%

Total

100.0%

100.0%

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