Red Lion Hotels CORP (Form: 8-K, Received: 04/03/2017 17:14:14)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

April 3, 2017 (March 28, 2017)
Date of Report (Date of earliest event reported)

RED LION HOTELS CORPORATION

(Exact Name of Registrant as Specified in Charter)




Washington	001-13957	91-1032187
(State or Other Jurisdiction	(Commission file number)	(I.R.S. Employer
of Incorporation)		Identification No.)

201 W. North River Drive
Suite 100
Spokane, Washington 99201
(Address of Principal Executive Offices, Zip Code)

(509) 459-6100
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On March 28, 2017, the Compensation Committee of our board of directors approved the following:

(i) Base Salaries . The annual base salaries of our executive officers were set, effective March 28, 2017, at the respective amounts shown in the following table:



Executive	Annual Base Salary
Gregory T. Mount	$530,000
Douglas Ludwig	$375,000
William J. Linehan	$337,000
Thomas L. McKeirnan	$307,000
Harry Sladich	$259,000

(ii) RSU grants. The executive officers were granted time-based restricted stock units (“RSUs”) under our 2015 stock incentive plan covering the number of shares of our common stock shown opposite their respective names in the following table:



Executive	Number of Shares of Common Stock Underlying RSUs ⁽¹⁾	Value of Stock Underlying RSUs ⁽²⁾
Gregory T. Mount	65,780	$463,750
Douglas Ludwig ⁽³⁾	26,978	$187,500
William J. Linehan	14,340	$101,100
Thomas L. McKeirnan	13,064	$92,100
Harry Sladich	11,021	$77,700

(1) The RSUs will, subject to continued employment, vest 25% on each anniversary of the date of grant.
(2) Based on the closing market price of our common stock on March 31, 2017 of $7.05 per share, except for Douglas Ludwig, which is based on the closing market price of our common stock on April 3, 2017.
(3) Mr. Ludwig started on April 3, 2017.

(iii) PSU grants. The compensation committee approved the grant of performance based restricted stock units (“PSUs”) under our 2015 stock incentive plan covering the number of shares of our common stock shown opposite their respective names in the following table. The PSUs will vest March 31, 2020 in the event the executives have achieved specified performance goals described in each executives grant agreement. The following grants are contingent upon shareholder approval of an amendment to our existing 2015 stock incentive plan at our 2017 annual shareholders meeting:



Executive	Number of Shares of Common Stock Underlying PSUs ⁽¹⁾	Value of Stock Underlying PSUs ⁽¹⁾
Gregory T. Mount	105,248	$742,000
Douglas Ludwig	42,553	$300,000
William J. Linehan	22,945	$161,760
Thomas L. McKeirnan	20,902	$147,360
Harry Sladich	17,634	$124,320

(1) Number of shares shown represents the maximum number of shares that may be issued to each executive on the vesting date if all performance measures have been achieved. The PSUs will be granted on May 25, 2017, the date of the annual meeting, if we receive shareholder approval for the amendment to our 2015 Incentive Plan.

(iv) 2017 RLHC Executive Officers Bonus Plan .

The Plan provides for potential bonuses for our Chief Executive Officer, Chief Financial Officer and our Executive Vice Presidents. The target and maximum bonuses under the Plan (“Target Bonuses”) are as follows:



Eligible Employees	Target Bonus	Maximum Bonus
Chief Executive Officer	100% of Base Salary	160% of Base Salary
Chief Financial Officer	70% of Base Salary	112% of Base Salary
Executive Vice President	50% of Base Salary	80% of Base Salary

Bonuses under the Plan will be based on the following three performance goals:


(1)	Achievement of a company goal based on target Adjusted EBITDA for 2017 (“Target Adjusted EBITDA”);


(2)	Achievement of one or more department goals based on applicable division or department performance such as gross operating profit; revenues from group business; RevPar growth; increase in RevPar index; improvement in customer service competitive quality index;

associate engagement; and addition of franchised and managed hotels to RLHC’s system of hotels; and


(3)	Achievement of one or more individual goals such as execution of growth initiatives or other corporate strategic goals and/or personal development.

The department and individual goals are established by the CEO and Compensation Committee.

To determine bonuses under the Plan, the EBITDA goal will be weighted 80% and the other two goals will be weighted 20%. No bonus will be payable under the Plan unless the ratio (“EBITDA Goal Achievement”) of (i) our actual adjusted EBITDA for 2017, to (ii) Targeted Adjusted EBITDA exceeds 87.8%.

An executive must be employed by us at the time of payment in order to receive a payout. All payments under the Plan are subject to previous approval by the Compensation Committee. Bonuses otherwise payable under the Plan may be deferred, partially paid or withheld in their entirety if the Compensation Committee determines that to be in the best interests of our company.

A copy of the Plan is included as Exhibit 10.1 to this report.

The foregoing is a summary of the matters approved by the Compensation Committee. In the event of any difference between this summary and the actual terms of the documents that implement these matters, the terms of those documents will control.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits



Exhibit No.		Exhibit
10.1		2017 RLHC Executive Officers Bonus Plan

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




Dated: April 3, 2017	RED LION HOTELS CORPORATION
	By:	/s/ Thomas L. McKeirnan
		Thomas L. McKeirnan
		Executive Vice President, General Counsel and Secretary

2017 RLHC Executive Officers Bonus Plan

Purpose

RLHC is committed to compensating employees through comprehensive and competitive pay packages that include base salary, bonus programs, incentive plans, competitive benefits plans, and reward and recognition programs. These programs are designed to motivate employees to exceed performance expectations in support of the company’s business objectives.

The Executive Officers Bonus Plan (“Plan”) provides the opportunity for annual bonus payments to the contributors who drive the successful attainment of company goals. The success of the company relies on many factors. Adjusted EBITDA is the main driver behind this plan, however; our success also depends on department and individual goals.

Plan Year

January 1, 2017 to December 31, 2017

Eligible Employees; Target Bonus and Maximum Bonus



Eligible Employees	Target Bonus	Maximum Bonus
Executive Vice President	50% of Base Salary	80% of Base Salary
Chief Financial Officer	70% of Base Salary	112% of Base Salary
Chief Executive Officer	100% of Base Salary	160% of Base Salary

An employee must hold one of the above positions at the beginning of the Plan Year to be eligible to participate in this Plan. Transfers to an ineligible position that occurs after the Plan Year will not affect any bonus earned during the Plan Year. Position transfers that occur during the Plan year may result in a pro-rated bonus amount for each position based upon the target bonus amount and the achievement of bonus criteria for each position.

Plan Components

Whether a participant will receive a bonus under the Plan depends on the extent to which the following goals are achieved:

(1) A company goal based on target Adjusted EBITDA for 2017 (“Target Adjusted EBITDA”);


(2)	One or more department goals based on applicable division or department performance such as gross operating profit; revenues from group business; RevPar growth; increase in RevPar index; improvement in customer service competitive quality index; associate engagement; and addition of franchised and managed hotels to RLHC’s system of hotels; and


(3)	One or more individual goals such as execution of growth initiatives or other corporate strategic goals and/or personal development.

The department and individual goals are established by the CEO and Compensation Committee.

Bonus Calculation

For purposes of calculating the bonuses, if any, due under this Plan, the company goal achievement (“EBITDA Goal Achievement”) will be the fraction (expressed as a percentage) determined by dividing (i) RLHC’s 2017 Adjusted EBITDA, as disclosed in the 2017 Form 10‑K, by (ii) Targeted Adjusted EBITDA. There will be no bonus payout to the participants under this calculation unless this percentage exceeds 87.8%.

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The EBITDA Goal Achievement percentage will determine the tentative payouts, if any, to which the participants are entitled, as set forth in or determined from the following applicable table:



	EBITDA Goal Achievement	Target Multiplier(1)	Tentative EVP Payout: % of base salary	Tentative CFO Payout: % of base salary	Tentative CEO Payout: % of base salary

Maximum	120%	160%	80%	112%	160%
	115%	145%	72.5%	101.5%	145%
	110%	130%	65%	91%	130%
	105%	115%	57.5%	80.5%	115%
Target	100%	100%	50%	70%	100%
	97.85%	93.55	46.775%	65.485	93.55%
	95.70%	87.10%	43.55%	60.97%	87.10%
	93.55%	80.65%	40.325%	56.455%	80.65%
Budget	91.4%	74.2%	37.1%	51.94%%	74.2%
	90.2%	57.8%	28.9%	40.46	57.8%
	89.0%	41.4%	20.7%	28.98	41.4%
Threshold	87.8%	25%	12.5%	17.5%	25%

(1) The Target Multiplier and tentative payout percentages will be linearly interpolated for EBITDA Goal Achievement percentages that are between any two percentages shown in the table.

If a participant achieves both his department and individual goals, he will be entitled to a payout (“Full Payout”) equal to the percentage of base salary determined from the above table for the RLHC EBITDA Goal Achievement percentage. If the participant achieves less than all of his department and individual goals, he will be entitled to between 80% and 99% of the Full Payout. If the participant achieves neither his department nor his individual goals, then he will be entitled to 80% of the Full Payout.

Clawback

A participant who receives a bonus under the Plan will be required to repay the bonus to RLHC to the extent required by (i) any “clawback” or recoupment policy adopted by RLHC to comply with the requirements of any applicable laws, rules or regulations, or (ii) any applicable law, rule or regulation that imposes mandatory recoupment.

Administration

The Director of Compensation and Benefits, EVP HR, and CFO will administer the Plan.

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Calculation, Approval and Payment

As soon as the necessary information is available following the end of the Plan Year, the EVP HR and the VP, Accounting will complete the bonus calculations for each participant and submit them to the CFO for review and approval. Once approved by the CFO, he will submit the bonus calculations to the Compensation Committee for final approval. Upon Compensation Committee approval, the CFO will provide the payment information to the VP, Accounting and EVP, HR for recordkeeping, who will in turn submit it to the payroll office for payments. Payments will be made to participants as soon as administratively possible following the end of the bonus period. Typically, payments are approved following the February Board meeting and paid as soon as practical thereafter. Calculations are based on the base salary of the participant on the last day of the Plan Year.

Effect of Change in Employment Status/Termination

Leaves of Absences: To the extent a participant qualifies for an approved leave of absence, that participant’s bonus will not be forfeited, but rather will be prorated. If the leave involves accrued paid leave, the bonus will be unaffected. If the leave involves unpaid leave, the bonus will be prorated based upon the actual number of days worked plus any paid leave as a proportion of the full Plan Year.

Terminations: Bonuses for this Plan are not earned or vested until they are approved by the Compensation Committee and paid. Any bonuses earned will be determined and paid on or before March 31, 2018. To encourage continued employment with RLHC, participants must be employed as of the date of payout in order to earn a bonus. Therefore, any participant whose employment terminates prior to the date of payout will not earn, vest in, or receive a bonus.

General Provisions

There is an overriding discretionary analysis of each participant’s eligibility to receive a bonus. Even though an individual might earn a bonus based on the terms of this Plan, a bonus can be adjusted up or down or not paid entirely in the sole discretion of the Compensation Committee Directors. For example a bonus may be adjusted down for overall substandard work performance of the participant, including, but not limited to the below. For example, if a participant fails to follow company policy and procedures, exposes the company to legal liability, exhibits inappropriate behavior, withholds information, or does not adequately follow through on critical incidents, he or she may be disqualified from receiving a bonus. Other disqualifiers may include unacceptable performance against established performance objectives, unacceptable scores on internal audit processes (e.g., HR, Accounting, Risk Management, Internal Audit, Quality Assurance), or poor associate or customer satisfaction scores.

Notwithstanding anything to the contrary in this Plan, individual bonus payments may be deferred, partially paid or withheld in their entirety, at the sole discretion of the Compensation Committee, in consideration of the overall best interests of the company. RLHC reserves the right to cancel, change, modify or interpret any and all provisions of the Plan at any time without notice. Participation in the Plan does not create any entitlement to continued employment and does not alter the at-will status of participants. This Plan will be governed and construed in accordance with the laws of the state of Washington.

This Plan supersedes all previous plans in existence and any past written or verbal communication to any participant regarding the terms of any incentive plan.

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