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
Date of Report (Date of earliest event reported): May 31, 2008
LASALLE HOTEL PROPERTIES
(Exact name of registrant specified in its charter)
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Maryland
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1-14045
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36-4219376
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(State of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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3 Bethesda Metro Center
Suite 1200
Bethesda, Maryland 20814
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (301) 941-1500
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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The board of trustees of LaSalle Hotel Properties (NYSE:LHO) adopted a succession plan with respect to its Chairman, Chief Executive Officer and
President, Jon E. Bortz, and its Chief Operating Officer, Michael D. Barnello. Pursuant to the succession plan, Mr. Bortz will retire as Chief Executive Officer as of July 1, 2010, and Mr. Barnello will assume the role and duties of
Chief Executive Officer at that time. The succession plan includes Mr. Bortz continuing in his role as Chairman of the Board after his retirement. In addition, Mr. Barnello (age 42) was named President of LaSalle Hotel Properties effective
immediately. Michael D. Barnello has served as Chief Operating Officer and Executive Vice President of Acquisitions of the Company and President of LaSalle Hotel Lessee, Inc. since their formation.
The board of trustees approved the following changes to the cash compensation for Mr. Barnello:
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Effective July 1, 2008, the 2008 annual base salary of Mr. Barnello will be increased to $500,000.
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Effective July 1, 2008, the annual cash incentive bonus target amount for Mr. Barnello will be increased to 100% of his annual base salary, or $500,000.
For 2008, the increase will be implemented on a pro rata basis (i.e., a total target amount of $397,000, calculated as (x) 50% of Mr. Barnello’s current target bonus of $294,000, or $147,000, plus (y) 50% of the $500,000 target
bonus applicable July 1 and after, or $250,000).
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The board of trustees also approved the following changes to the
equity compensation for Mr. Barnello:
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Mr. Barnello was granted an award of shares under the Company’s 1998 Share Option and Incentive Plan in respect of 300,000 shares, of which 175,000 shares
are subject to time-based vesting and 125,000 are subject to performance-based vesting, as described in greater detail below:
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with respect to the time-based portion of the award, the award was made pursuant to an award agreement substantially in the form of the award agreement used for the
time-based restricted shares awarded to Mr. Barnello in December 2007, except that instead of pro rata vesting over three years, the 175,000 shares will vest as follows: (i) 75,000 shares will vest on June 30, 2011, (ii) 50,000
shares will vest on June 30, 2014, and (iii) 50,000 shares will vest on June 30, 2017; and
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with respect to the performance-based portion of the award, the award was made pursuant to an agreement to award 125,000 (in target amount) performance-based
restricted shares pursuant to an award agreement substantially in the form of the award agreement used for the performance-based restricted share award granted to Mr. Barnello in December 2007, except that:
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with respect to 25,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2011 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2008 and ending with the per-share closing price of the Company’s common shares on June 30, 2011;
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with respect to 50,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2014 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2011 and ending with the per-share closing price of the Company’s common shares on June 30, 2014;
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with respect to 50,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2017 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2014 and ending with the per-share closing price of the Company’s common shares on June 30, 2017;
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once an award amount is determined and shares are awarded in accordance with the agreement and the equity incentive plan, such shares will not be subject to any
additional time-based vesting (as was the case with the performance awards granted in December 2007);
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the actual number of shares awarded pursuant to the performance award agreement could be 0% of the target amount or up to 200% of the target amount, and none of the
performance shares is outstanding until issued in accordance with award agreement based on performance; and
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while Mr. Barnello serves as President and Chief Operating Officer, his annual target amount of long-term equity incentive compensation will be increased to
$1,000,000 (as determined in the discretion of the compensation committee of the board of trustees), of which the compensation committee expects 50% to be in the form of grants of restricted shares subject to time-based vesting and 50% to be in the
form of agreements to award restricted shares where the award amount is not determined immediately but dependent on performance over a period of time.
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In addition, at the next board of trustees meeting, the board intends to increase the number of trustees constituting the full board of trustees to eight, and appoint Mr. Barnello as a trustee (initially to the
class of trustees whose terms expire 2009), to serve until his successor is duly elected and qualified.
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Upon Mr. Barnello’s appointment to Chief Executive Officer, (i) the compensation committee
will adjust his compensation to reflect appropriate Chief Executive Officer compensation (as determined in the discretion of the committee), and (ii) the severance multiple in Mr. Barnello’s severance agreement will be increased from
2.0 to 3.0 and the stay bonus multiple in the severance agreement will be increased from 0.5 to 1.0.
Mr. Barnello’s employment
relationship with the Company remains on an at-will basis.
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Item 7.01
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Regulation FD Disclosure.
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Pursuant to a press
release on June 2, 2008, LaSalle Hotel Properties (NYSE: LHO) announced that a succession plan with respect to its Chairman and Chief Executive Officer and President, Jon E. Bortz, and its Chief Operating Officer, Michael D. Barnello had been
approved by the Company’s board of trustees. A copy of the press release is furnished as an exhibit to this report and is incorporated by reference herein.
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Item 9.01
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Financial Statements and Exhibits.
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The following exhibits are included
with this report.
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Exhibit
Number
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Description
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10.1
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Offer letter to Michael D. Barnello
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99.1
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Press release dated June 2, 2008 issued by LaSalle Hotel Properties
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The information contained in the press release attached as Exhibit 99.1 to this report shall not
be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information contained in the press release attached as Exhibit 99.1 to
this report shall not be deemed to be incorporated by reference in the filings of the registrant under the Securities Act of 1933.
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SIGNATURES
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 thereunto duly authorized.
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LASALLE HOTEL PROPERTIES
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By:
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/s/ Hans S. Weger
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Hans S. Weger
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Executive Vice President, Treasurer and Chief Financial Officer
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Dated: June 2, 2008
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Exhibit Index
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Exhibit
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Description
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10.1
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Offer letter to Michael D. Barnello
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99.1
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Press release dated June 2, 2008 issued by LaSalle Hotel Properties
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Exhibit 10.1
[LASALLE HOTEL PROPERTIES LETTERHEAD]
May 31, 2008
Michael D. Barnello
8811 Clewerwall Drive
Bethesda, Maryland 20817
Dear Mike:
We are pleased to confirm the following offer to you to become the President, as well as Chief Operating Officer, of LaSalle Hotel Properties (the “Company”):
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Effective upon your acceptance of this offer, your title will be President and Chief Operating Officer, and you will have the duties and responsibilities
commensurate with such position as shall be reasonably and in good faith determined from time to time by the Chief Executive Officer. You will continue to report to the Chief Executive Officer, Jon E. Bortz, who will relinquish the title of
President but remain Chief Executive Officer and Chairman of the Company.
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Effective July 1, 2008, your 2008 annual base salary will be increased to $500,000, paid in accordance with the Company’s pay practices for its executive
officers generally, including subject to legally required or authorized payroll deductions and applicable tax withholdings.
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Effective July 1, 2008, your annual cash incentive bonus target amount will be increased to 100% of your annual base salary, or $500,000. For 2008, the
increase will be implemented on a pro rata basis (i.e., a total target amount of $397,000, calculated as (x) 50% of your current target bonus of $294,000, or $147,000, plus (y) 50% of the $500,000 target bonus applicable after July, or
$250,000). The annual cash incentive bonus plan will otherwise continue to apply in accordance with its terms and conditions and as determined by the compensation committee of the Company’s board of trustees.
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At the next board of trustees meeting, the number of trustees constituting the full board of trustees would be increased to eight, and you will be appointed as a
trustee (initially to the class of trustees whose terms expire 2009), to serve until your successor is duly elected and qualified.
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While you serve as President and Chief Operating Officer, you will continue to be eligible to participate in the long-term equity incentive compensation policies
that may be adopted by the compensation committee of the board of trustees for the Company’s executive officers generally. In this regard, your annual target amount of long-term equity incentive compensation will be increased to $1,000,000 (as
determined in the discretion of the compensation committee of the board of trustees), of which we expect
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50% to be in the form of grants of restricted shares subject to time-based vesting (but not performance-based vesting) and 50% to be in the form of
agreements to award restricted shares where the award amount is not determined immediately but dependent on performance over a period of time.
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Effective upon your acceptance of this offer, the Company will grant you an award consisting of 300,000 restricted shares, of which 175,000 shares are subject to
time-based vesting and 125,000 are subject to performance-based vesting, as described in greater detail below:
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with respect to the time-based portion of the award, the award will be made pursuant to an award agreement substantially
in the form of the award agreement used for the time-based restricted shares awarded to you in December 2007 (including with respect to dividends), except that instead of pro rata vesting over three years, the 175,000 shares will vest as follows:
(i) 75,000 shares, or 25% of the total 300,000 shares, will vest on June 30, 2011, (ii) 50,000 shares, or 16-
2
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3
%
of the total 300,000 shares, will vest on June 30, 2014, and (iii) 50,000 shares, or 16-
2
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3
% of the total 300,000
shares, will vest on June 30, 2017; and
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with respect to the performance-based portion of the award, the award will be made pursuant to an agreement to award 125,000 (in target amount) performance-based
restricted shares pursuant to an award agreement substantially in the form of the award agreement used for the performance-based restricted share award granted to you in December 2007 (the “Performance Award Agreement”), except that:
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with respect to 25,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2011 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2008 and ending with the per-share closing price of the Company’s common shares on June 30, 2011;
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with respect to 50,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2014 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2011 and ending with the per-share closing price of the Company’s common shares on June 30, 2014;
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with respect to 50,000 shares (in target amount), the actual amount of the award will be determined on July 1, 2017 and will depend on the Company’s total
return over a three-year measuring period beginning with the per-share closing price for the Company’s common shares on June 30, 2014 and ending with the per-share closing price of the Company’s common shares on June 30, 2017;
and
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once an award amount is determined and shares are awarded in accordance with the agreement and the equity incentive plan, such shares will not be subject to any
additional time-based vesting (as was the case with the performance awards granted in December 2007).
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We and you acknowledge that the performance metrics and dividend accrual provisions in the Performance Award Agreement will be the same as the performance metrics
and dividend accrual provisions contained in the award agreement used for the performance-based restricted share award granted to you in December 2007, subject to the different measuring periods as specified above. In addition, the actual number of
shares awarded pursuant to the Performance Award Agreement could be 0% of the target amount or up to 200% of the target amount.
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During your employment as President and Chief Operating Officer, you will continue to be eligible to participate in customary and usual fringe benefits generally
available to the Company’s executive officers, subject to the terms and conditions of the Company’s policies and benefit plan documents and subject to the ability of the Company to change or eliminate the fringe benefits on a prospective
basis. You will also continue to be entitled to earn vacation at the rate applicable to the Company’s executive officers generally.
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We extend this offer to you in connection with a succession plan adopted by the board of trustees. The succession plan provides that the board of trustees expects to appoint you as the Chief Executive Officer upon the retirement of Jon E.
Bortz from the Chief Executive Officer position and that such retirement will be July 1, 2010. Upon your appointment to Chief Executive Officer, (i) the compensation committee would adjust your compensation to reflect appropriate Chief
Executive Officer compensation (as determined in the discretion of the committee), and (ii) the severance multiple in your severance agreement in Section 3(b)(2) will be increased from 2.0 to 3.0 and the stay bonus multiple in
Section 3(e) will be increased from 0.5 to 1.0. We will publicly announce the succession plan promptly after your acceptance of this offer.
As you
are aware, the Company does not have employment agreements with its executive officers and, accordingly, your employment with the Company will continue to be on an at-will basis.
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This letter describes in full the offer that has been extended to you and supersedes any previous oral or written offer
that may have been made. This letter will be governed and construed in accordance with the laws of the State of Maryland. This letter may be amended or modified only with the written consent of you and the Company’s board of trustees.
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Sincerely,
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LaSalle Hotel Properties
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By:
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/s/ Jon E. Bortz
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Jon E. Bortz,
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Chairman and Chief Executive Officer
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I agree and accept the change in my employment position and title and the other terms and conditions
described above.
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/s/ Michael D. Barnello
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Michael D. Barnello
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Date: May 31, 2008
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Exhibit 99.1
LaSalle Hotel Properties Announces
Succession Plan
Michael D. Barnello to Become CEO on July 1, 2010
BETHESDA, MD, June 2, 2008
— The Board of Trustees of LaSalle Hotel Properties (NYSE:LHO) adopted a succession plan with respect to its Chairman, Chief
Executive Officer and President, Jon E. Bortz, and its Chief Operating Officer, Michael D. Barnello. Pursuant to the succession plan, Mr. Bortz will retire as Chief Executive Officer as of July 1, 2010, and Mr. Barnello will assume
the role and duties of Chief Executive Officer at that time.
The succession plan includes Mr. Bortz continuing in his role as Chairman of the Board after his retirement. In addition, Mr. Barnello was named President of LaSalle Hotel
Properties effective immediately. At its July meeting, the Board plans to increase the number of Trustees to eight and elect Mr. Barnello as a Trustee.
“Though the Board deeply regrets Jon’s decision, it greatly appreciates the leadership and guidance he has provided,” said Stuart L. Scott Chairman of the Nominating and Governance Committee for LaSalle Hotel Properties.
“Jon led the development and execution of the strategies that have allowed LaSalle Hotel Properties to grow by more than three-fold over the past 10 years while significantly increasing the annual dividend to our shareholders and providing
industry-leading returns to the Company’s shareholders.”
Jon E. Bortz has served as Chairman of the Company’s Board of Trustees since
January 1, 2001, a trustee of the Company since 1998 and has been President and Chief Executive Officer of the Company since its formation. Mr. Bortz is a member of the Board of Governors of the National Association of Real Estate
Investment Trusts and a member of its Executive Committee. He is also a member of the Board of Trustees of Federal Realty Investment Trust and a member of the Board of Directors of Metropark USA, a privately-owned clothing retailer.
“Mike has played an integral role in the Company’s growth since we went public in 1998,” said Mr. Bortz. “We have seen our vision of creating a
premier hotel investment company become a reality by staying true to our core mission of creating long-term shareholder value. I look forward to working with Mike over the next two years to create a seamless transition for him to assume the role of
CEO and build on the success the Company has experienced over the past 10 years.”
Michael D. Barnello has served as Chief Operating Officer and
Executive Vice President of Acquisitions of the Company and President of LaSalle Hotel Lessee, Inc. since their formation. As Chief Operating Officer, Mr. Barnello has been and will continue to be responsible for all acquisition and asset
management activities of the Company. Mr. Barnello holds a B.S. in Hotel Administration from the Cornell School of Hotel Administration.
LaSalle
Hotel Properties is a leading multi-operator real estate investment trust owning 31 upscale and luxury full-service hotels, totaling approximately 8,500 guest rooms in 14 markets in 11 states and the District of
Columbia. The Company focuses on owning, redeveloping and repositioning upscale and luxury full-service hotels located in urban, resort and convention
markets. LaSalle Hotel Properties seeks to grow through strategic relationships with premier lodging companies, including Westin Hotels and Resorts, Sheraton Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, Crestline Hotels and
Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Gemstone Hotels & Resorts, LLC, Thompson Hotels, Sandcastle
Resorts & Hotels, Davidson Hotel Company, Denihan Hospitality Group and the Kimpton Hotel & Restaurant Group, LLC.
This press release,
together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this
statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of
the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. Forward-looking statements in this press release include, among others, statements about
expected management succession at the Company. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and which could
materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) changes in personal circumstances or performance affecting
individual officers at the Company, and (ii) the risk factors discussed in the Company’s Annual Report on Form 10-K as updated in its Quarterly Reports. Accordingly, there is no assurance that the Company’s expectations will be
realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any
change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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Additional Contacts:
Hans Weger, LaSalle Hotel Properties – 301/941-1512
For additional information or to receive press releases via e-mail, please visit our website at
www.lasallehotels.com