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 5.02.Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Directors.
On January 27, 2017, Sunstone Hotel Investors, Inc. (Sunstone)
and Sunstones operating partnership, Sunstone Hotel Partnership,
LLC (the Operating Partnership, and together with Sunstone, the
Company), entered into employment agreements (the Employment
Agreements) with each of its current named executive officers:
John Arabia, President and Chief Executive Officer, Bryan Giglia,
Executive Vice President Chief Financial Officer, Marc Hoffman,
Executive Vice President Chief Operating Officer, and Robert
Springer, Executive Vice President Chief Investment Officer
(collectively, the Executives), to which each of the Executives
will continue to be employed by the Company in their respective
current positions. The Employment Agreements will supersede and
replace (and for Messrs. Arabia and Hoffman, will amend and
restate) any employment, change in control and/or employment
offer letter agreements previously entered into with the
Executives.
The initial term of each Employment Agreement is scheduled to
expire on March 31, 2018, unless earlier terminated by either
party. Following the expiration of the initial term, the term of
each Employment Agreement automatically will be renewed for
successive one-year periods on each anniversary of March 31, 2018
unless either party provides the other with notice of intent not
to renew the Employment Agreement.
The 2016 annual base salary for Messrs. Arabia, Giglia, Hoffman
and Springer were $750,000, $430,000, $520,000 and $395,000,
respectively, in each case, which may be increased from time to
time in the Companys sole discretion. In addition, under the
Employment Agreements, each Executive will be eligible to receive
an annual cash performance bonus based on the attainment of
performance goals determined by the Company with a threshold
level equal to 75% (or 50% for Mr. Arabia) of base salary, a
target level equal to 50% (or 150% for Mr. Arabia) of base
salary, a high level equal to 150% (or 225% for Mr. Arabia) of
base salary and a superior (maximum) level equal to 175% (or 275%
for Mr. Arabia) of base salary.
Under the Employment Agreements, each Executive also will be
eligible to earn annual equity awards with a threshold level
equal to 150% of base salary, a target level equal to 200% (or
275% for Mr. Arabia) of base salary, a high level equal to 250%
(or 325% for Mr. Arabia) of base salary and a superior level
equal to 300% (or 425% for Mr. Arabia) of base salary, with no
guaranteed minimum (and any award may equal zero in any given
year). In the event that a change in control (as defined in the
Employment Agreements) occurs during the term of the Employment
Agreement, any outstanding Company equity awards will fully vest
immediately prior to the occurrence of such Change in Control.
Furthermore, the Employment Agreements provide that each
Executive will be eligible to participate in welfare and fringe
benefit plans, incentive plans and savings/retirement plans
generally available to senior executives of the Company.
If the Company terminates the Executives employment without cause
or the Executive terminates his employment for good reason, then
(i) the Executive will receive a cash severance payment equal to
the sum of (A) two (or three for Mr. Arabia) times the sum of (x)
the base salary in effect for the Executive on the date of
termination and (y) the greater of the Executives target annual
bonus for the year in which the termination occurs and the actual
annual bonus paid in respect of the last completed calendar year,
(B) any earned but unpaid annual bonus for a prior fiscal year,
and (C) a pro-rated bonus for the year in which the termination
occurs (based on the Executives target bonus), (ii) all
outstanding Company equity awards will vest to the extent such
outstanding awards were scheduled to vest within the 12-month
period immediately following the date of termination, and (iii)
the Executive will receive Company-paid continued health
insurance coverage for himself and his eligible family members
for up to 18 months following the termination date. The Companys
obligation to provide these severance payments and benefits is
conditioned upon the Executives timely execution (and
non-revocation) of a general release of claims.
If the Company terminates the Executives employment by reason
of a non-renewal of the Employment Agreement upon the
expiration of its term, and the Executive is willing and able,
at the time of such non-renewal, to continue performing
services during the renewal period, then, subject to the
Executives timely execution (and non-revocation) of a general
release of claims, the Executive will receive an amount equal
to 50% of the sum of (i) the base salary in effect for the
Executive on the date of termination and (ii) Executives target
annual bonus for the year in which the termination occurs.
However, if such termination occurs on or within 12 months
following a change in control, then the Executive will be
provided with the same payments and benefits as if Executives
employment was terminated by the Company without cause or the
Executive terminated his employment for good reason (as
described above).
If the Executives employment is terminated by reason of death
or disability, he or, as appropriate, his estate or
beneficiaries, will be paid an amount equal to the sum of (i)
50% of his annual base salary then in effect, (ii) any earned
but unpaid annual bonus for a prior fiscal year, and (iii) a
pro-rated bonus for the year in which the death or disability
occurs (based on the Executives target bonus). Additionally,
all outstanding time-based vesting Company equity awards will
vest and the Executive will receive Company-paid continued
health insurance coverage for himself and/or his eligible
family members for up to 18 months following the termination
date.
Each Employment Agreement also includes certain restrictive
covenants, including non-solicitation and nondisparagement
covenants. In connection with entering into the Employment
Agreements, the Company also expects each Executive to enter
into an indemnification agreement with the Company providing
that the Company will indemnify and advance expenses to him in
the case of certain claims made against him by virtue of his
position with the Company.
The above summary of the terms of each Employment Agreement is
qualified in its entirety by reference to the agreements,
copies of which are attached hereto as Exhibit 10.1, 10.2, 10.3
and 10.4, and are incorporated in this Item 5.02 by reference.
Item 9.01.FINANCIAL STATEMENT AND EXHIBITS.
(d)The following exhibits are furnished herewith:
EXHIBIT INDEX
|
ExhibitNo. |
Description |
|
10.1 |
Amended and Restated Employment Agreement, by and |
|
10.2 |
Employment Agreement, by and between the Company and |
|
10.3 |
Amended and Restated Employment Agreement, by and |
|
10.4 |
Employment Agreement, by and between the Company and |
Sunstone Hotel Investors, Inc. (NYSE:SHO-F) Recent Trading Information
Sunstone Hotel Investors, Inc. (NYSE:SHO-F) closed its last trading session down -0.34 at 25.10 with 5,100 shares trading hands.