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
June 21, 2018 (June 18, 2018)
Date of Report (Date of earliest event reported)
RED LION
HOTELS CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Washington
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001-13957
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91-1032187
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(State or Other Jurisdiction
of Incorporation)
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(Commission
file number)
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(I.R.S. Employer
Identification No.)
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1550 Market St. #350
Denver, CO 80202
(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:
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to
Rule 14a-12
under the Exchange Act (17 CFR
240.14a-12)
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☐
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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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☐
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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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Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or
Rule 12b-2 of
the Securities Exchange Act of 1934 (17
CFR §240.12b-2). Emerging
growth company ☐
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
(a) On June 18, 2018, Red Lion Hotels Corporation (“RLH Corporation”) received
the resignation of Mr. Enrico Marini Fichera from our Board of Directors. Mr. Marini Fichera was appointed as a director pursuant to the terms of an Investor Agreement dated June 15, 2015 (the “Investor Agreement”) with HNA
RLH Investments LLC (the “Shareholder”) and its affiliate, HNA Investment Management LLC (“Manager”), in connection with the Shareholder’s purchase on that date of 2,987,343 shares of RLH Corporation common stock. As
previously announced, on June 12, 2018 the Manager sold the Shareholder’s entire holding of RLH Corporation common stock to Coliseum Capital Partners, L.P., a Delaware limited partnership and Blackwell Partners, LLC—Series A, a
Delaware limited liability company. In connection with this sale, and pursuant to the terms of the Investor Agreement, Mr. Marini Fichera submitted his resignation. There were no disagreements between RLH Corporation and Mr. Marini Fichera
with respect to his resignation. RLH Corporation wishes to thank Mr. Marini Fichera for his service.
(c) On June 18, 2018, RLH Corporation
announced the promotion of Paul Sacco to Executive Vice President, President of Global Development. Mr. Sacco joined RLH Corporation in September 2017 as its Chief Development Officer. Prior to joining RLH Corporation, he served as President
and Chief Development Officer at TPG Hotels and Resorts from 2013-2017, and also held senior development roles at Pyramid Hotel Group and Starwood Hotels & Resorts Worldwide.
There are no arrangements or understandings between Mr. Sacco and any other persons pursuant to which he was selected as an officer and he has no direct
or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation
S-K.
Mr. Sacco is employed by RLH Corporation on an
at-will
basis. In his new role of Executive Vice President,
President of Global Development, Mr. Sacco is entitled to an annual base salary of $375,000, and is eligible to participate in our executive officer bonus plan, with an initial target bonus for 2018 equal to 50% of his base salary, prorated for
the portion of the year he is employed as Executive Vice President, President of Global Development, and a target bonus for 2019 equal to 80% of his base salary. Mr. Sacco is also eligible to receive in 2019 an annual grant of equity under our
2015 Stock Incentive Plan in the discretion of our Compensation Committee. Such equity grant would be equal in value to 80% of Mr. Sacco’s annual base salary, a portion of which would be in the form of restricted stock units (RSUs) that
will vest annually in equal tranches of 25% on each of the four anniversaries of the grant date, and the balance of which would be issued in the form of performance stock units (“PSUs”) that will vest in accordance with performance metrics
to be determined by the Compensation Committee in its sole discretion and consistent with the terms and conditions of PSUs issued to the Company’s other executive officers. In addition, upon his promotion Mr. Sacco received a
one-time
grant of 88,000 RSUs which vest on the four anniversary of issuance. Any such vested RSUs shall be settled exclusively in the common stock of the Company. The existing commission plan in which
Mr. Sacco participates will remain in effect through December 31, 2018, and is capped at a commission payment of $150,000.
A copy of the June 18, 2018 press release announcing the promotion of Mr. Sacco is included as Exhibit
99.1 to this report. Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities under that section and shall not be deemed
to be incorporated by reference into any filing of the registrant under the Securities Act of 1933 or the Exchange Act.
(e) On June 18, 2018, the
Compensation Committee of our Board of Directors approved the 2018 RLHC Executive Officers Bonus Plan (the “Plan”). The Plan provides for potential bonuses for our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
and our Executive Vice Presidents. The target and maximum bonuses under the Plan (“Target Bonuses”) are as follows:
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Eligible Employees
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Minimum
Bonus
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Threshold Bonus
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Target Bonus
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Maximum Bonus
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Executive Vice President
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0% of
Base Salary
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25% of
Base Salary
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50% of
Base Salary
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80% of
Base Salary
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EVP, Chief Operating Officer
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0% of
Base Salary
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30% of
Base Salary
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60% of
Base Salary
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96% of
Base Salary
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EVP, Chief Financial Officer
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0% of
Base Salary
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35% of
Base Salary
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70% of
Base Salary
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112% of
Base Salary
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Chief Executive Officer
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0% of
Base Salary
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50% of
Base Salary
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100% of
Base Salary
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160% of
Base Salary
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Bonuses under the Plan will be based on the following three performance goals:
(1) A company goal based on target Adjusted EBITDA for 2018 (“Target Adjusted EBITDA”);
(2) A company goal based on sales of company-owned hotels (“Hotel Sales”)
(3) One or more department or individual 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 other goals that advance department
or company 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 50%, the Hotel Sales goal 30% and the department/individual goals 20%. No bonus will be
payable under the Plan unless the ratio (“EBITDA Goal Achievement”) of (i) our actual adjusted EBITDA for 2018, to (ii) Targeted Adjusted EBITDA exceeds 90%, unless by discretion of the Compensation Committee.
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 payable under the Plan are subject to the Company’s clawback policy. 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 Plan. In the event of any difference between this summary and the actual terms of the Plan, the terms of the Plan will control.
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Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits.
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
hereunto duly authorized.
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RED LION HOTELS CORPORATION
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Date: June 21, 2018
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By:
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/s/ Douglas L. Ludwig
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Douglas L. Ludwig
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Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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Exhibit 10.1
2018 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, 2018 to December 31, 2018
Eligible Employees; Target Bonus and Maximum Bonus
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Eligible Employees
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Minimum
Bonus
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Threshold Bonus
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Target Bonus
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Maximum Bonus
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Executive Vice President
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0% of Base
Salary
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25% of Base Salary
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50% of Base Salary
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80% of Base
Salary
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EVP, Chief Operating Officer
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0% of Base
Salary
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30% of Base Salary
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60% of Base Salary
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96% of Base
Salary
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EVP, Chief Financial Officer
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0% of Base
Salary
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35% of Base Salary
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70% of Base Salary
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112% of
Base Salary
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Chief Executive Officer
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0% of Base
Salary
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50% of Base Salary
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100% of Base
Salary
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160% of
Base Salary
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An employee must hold one of the above positions at the beginning of the Plan Year to be eligible to
participate in this Plan, unless otherwise approved by the Compensation Committee. 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, the achievement of bonus criteria for each position and the discretion of the Compensation Committee.
Plan Components
Whether a participant
will receive a bonus under the Plan depends on the extent to which the following goals are achieved:
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(1)
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A company goal based on target Adjusted EBITDA for 2018 (“Target Adjusted EBITDA”);
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(2)
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A company goal based on sales of company-owned hotels (“Hotel Sales”); and
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(3)
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One or more department or individual 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 other goals that advance department or company strategic goals and/or personal development. The
department and individual goals are established by the CEO and Compensation Committee.
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Page 1 of 4
Bonus Calculation
For purposes of determining the bonuses, if any, due under this Plan for achievement of the Target Adjusted EBITDA (“EBITDA Goal
Achievement”), the calculation will be the fraction (expressed as a percentage) determined by dividing (i) RLHC’s 2018 Adjusted EBITDA, as disclosed in the 2018
Form 10-K,
further adjusted
by the net gain or loss on hotel dispositions, by (ii) 2018 Target Adjusted EBITDA, further adjusted for hotels sales and other authorized dispositions by removing budgeted performance of disposed hotels subsequent to the disposition with
mid-month closings being prorated. There will be no bonus payout to the participants under this calculation unless this percentage exceeds 90%.
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:
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EBITDA
Goal
Achievement
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Target Multiplier(1)
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Tentative
EVP Payout:
% of base salary
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Tentative
EVP, COO
Payout:
% of base
salary
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Tentative
EVP, CFO
Payout:
% of base
salary
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Tentative
CEO
Payout:
% of base
salary
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Maximum
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120
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%
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160
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40
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%
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48
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%
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56
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%
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80
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%
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115
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%
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145
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%
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36.25
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%
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43.5
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%
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50.75
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%
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72.5
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%
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110
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130
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32.5
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39
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45.5
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%
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65
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105
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115
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%
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28.75
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%
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34.5
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%
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40.25
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%
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57.5
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%
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Target
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100
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%
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100
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%
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25
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%
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30
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%
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35
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%
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50
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%
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97.5
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%
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87.5
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%
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21.875
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%
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26.25
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%
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30.625
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%
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43.75
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%
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95
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%
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75
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%
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18.75
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%
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22.5
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%
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26.25
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%
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37.5
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%
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92.5
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%
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62.55
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15.625
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%
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18.765
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%
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21.875
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%
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31.25
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%
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Threshold
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90
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%
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50
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%
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12.5
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%
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15
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%
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17.5
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%
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25
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%
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(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.
The goal payout has three elements, EBITDA performance, hotel sales and
departmental/individual goals. The ratio of payouts is as follows:
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1.
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EBITDA—represents 50% of the bonus payout as is reflected in the chart above.
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2.
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Hotel Sales—represents 30% of the bonus payout. To the extent the hotel sales target is met, as determined by the Compensation Committee, then up to 30% of the target bonus is paid to eligible participants.
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3.
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Department/Individual goals—represents 20% of the bonus payout. To the extent the department/individual goals are met, as determined collaboratively between the CEO and the Compensation Committee, then up to 20% of
the target bonus is paid to eligible participants.
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Page 2
The minimum threshold to receive any bonus payout is the 90% EBITDA target. Failure to meet
this threshold, will result no bonus payment, unless by discretion of the Compensation Committee.
Notwithstanding the foregoing, bonus
payouts in excess of 100% are possible (up to 160%), if the EBITDA goal is exceeded and/or the Hotel Sales or Department/Individual Goals are exceeded, as determined by the Compensation Committee.
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 SVP, HR, and CFO will
administer the Plan.
Calculation, Approval and Payment
As soon as the necessary information is available following the end of the Plan Year, the SVP HR and the SVP, Chief Accounting Officer will
complete the bonus calculations for each participant and submit them to the CFO for review and approval including a review and recommendation by the CEO of the achievement of department and individual goals. 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 SVP, Chief Accounting Officer and SVP, 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, 2019. 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
Page 3
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
Page 4
Exhibit 99.1
RLH CORPORATION PROMOTES PAUL SACCO TO
EXECUTIVE VICE PRESIDENT, PRESIDENT OF GLOBAL DEVELOPMENT
Tenured industry vet to oversee all franchise development for the Company worldwide
DENVER (June 18, 2018)
—
RLH Corporation
(NYSE:RLH) announced today the promotion of Paul Sacco to Executive Vice President, President of
Global Development. Since joining RLH Corporation, Sacco has had tremendous success developing and growing the Company’s upscale brands. In his new role, Sacco will oversee all franchise growth efforts for RLH Corporation brands worldwide, with
a focus on organic growth.
Sacco joined RLH Corporation in September, 2017. In his role, he oversaw development of the Company’s upscale brands
including 10 new franchise license agreements with hotels owned by affiliates of Inner Circle Investments; the Company’s first refreshed Signature hotel in San Francisco; and The Island by Hotel RL, the first resort destination for the brand,
among many other key hotel signings.
Prior to joining RLH Corporation, Sacco was President & Chief Development Officer at TPG Hotels &
Resorts, and held senior development roles at Pyramid Hotel Group and Starwood Hotels & Resorts Worldwide.
“In his early days at RLH
Corporation, Paul has had incredible success growing our upscale brands and helping meet our company goals,” said RLH Corporation President & CEO Greg Mount. “We are excited to have such a tenured and experienced development
executive take the lead as we continue to execute the transition to a higher margin franchise hotel business with an asset light business model.”
“I joined RLH knowing that the team had created a great platform for growth,” added Sacco. “During my tenure I have seen firsthand the
excitement owners feel when they learn how uniquely we approach the hotel business. There is tremendous growth potential at RLH Corporation, and I am excited to be working with the full executive team to further develop our footprint.”
To learn more about franchising with RLH Corporation, visit
franchise.rlhco.com
. We don’t wait for the future. We create it.
About RLH Corporation
Red Lion Hotels Corporation is an
innovative hotel company doing business as RLH Corporation and focuses on the franchising, management and ownership of upscale, midscale and economy
hotels. The company focuses on maximizing return on invested capital for hotel owners across North America through relevant brands, industry-leading technology and forward-thinking services. For
more information, please visit the company’s website at
www.rlhco.com
.
Social Media:
www.Facebook.com/myhellorewards
www.Twitter.com/myhellorewards
www.Instagram.com/myhellorewards
www.Linkedin.com/company/rlhco
Investor Relations Contact:
Amy Koch
O: 509-777-6417
C: 917-579-5012
investorrelations@rlhco.com
Media Contact:
Dan Schacter
Director, Social Engagement and Public Relations
509-777-6222
dan.schacter@rlhco.com