UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
statement pursuant to section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
Filed
by a Party other than the Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to § 240.14a-12
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Sonesta
International Hotels Corporation
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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(2)
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Aggregate
number of securities to which transaction applies:
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116
HUNTINGTON AVENUE, FLOOR 9
BOSTON,
MASSACHUSETTS 02116
April 22,
2008
To Our
Stockholders:
You are
cordially invited to attend the Annual Meeting of Stockholders to be held on May
27, 2008, at 8:30 a.m., notice of which is enclosed. The Meeting will
be held at the Company’s Corporate Offices, at 116 Huntington Avenue, Floor 9,
Boston, Massachusetts. I hope that as many stockholders as possible
will attend.
Please date
and sign the enclosed Proxy and return it in the accompanying envelope. This
will not prevent you from voting in person at the Meeting if you so desire, in
which case you may revoke your Proxy at that time. By returning your signed
Proxy now, you can be sure that your vote will be counted even if you are not
able to attend the Meeting.
The Annual
Report of the Company for 2007 is being forwarded to stockholders together with
this Notice and Proxy Statement; however, any stockholder who wishes to receive
another copy of the Annual Report or the Company's Form 10-K may obtain one,
without charge, by writing to the Secretary of the Company at the above
address.
Roger P.
Sonnabend
Executive
Chairman of the Board
116
HUNTINGTON AVENUE, FLOOR 9
BOSTON,
MASSACHUSETTS 02116
NOTICE
OF ANNUAL MEETING
OF
STOCKHOLDERS
To the
Stockholders of
Sonesta
International Hotels Corporation:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Sonesta International
Hotels Corporation (the "Company"), will be held at the Company’s Corporate
Offices, at 116 Huntington Avenue, Floor 9, Boston, Massachusetts, on May 27,
2008, at 8:30 a.m., for the following purposes.
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1.
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To
elect a Board of Directors.
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2.
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To
consider and transact such other business as may properly come before the
Meeting or any adjournment or adjournments
thereof.
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Stockholders
of record at the close of business on April 15, 2008 are entitled to notice of
and to vote at the Meeting.
By Order of the
Board of Directors,
David A.
Rakouskas
Secretary
Dated:
April 22, 2008
PROXY
STATEMENT
Solicitation
of Proxies
The
accompanying Proxy is solicited by the Board of Directors of the
Company. All shares represented by the accompanying Proxy will be
voted in accordance with the specified choice of the stockholders. In the
absence of directions, the Proxy will be voted for the election of the nominees
for Directors named in this Proxy Statement. The Proxy may be revoked at any
time before it is exercised by notifying the Company in writing at the address
listed on the Notice of Annual Meeting of Stockholders, Attention--Office of the
Secretary, by delivering a later signed proxy, or by voting in person at the
Meeting.
All costs of
solicitation of Proxies will be borne by the Company. In addition to
solicitation by mail, the Company's Directors, officers and regular employees,
without additional remuneration, may solicit Proxies by telephone, facsimile and
personal interviews. Brokers, custodians and fiduciaries will be requested to
forward Proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their out-of-pocket and clerical
disbursements in connection therewith. This Proxy Statement and accompanying
Proxy are first being mailed to stockholders on or about April 22,
2008.
Outstanding
Voting Securities and Voting Rights
The
outstanding voting securities of the Company as of April 15, 2008 consisted of
3,698,230 shares of Common Stock. One third of the outstanding stock constitutes
a quorum. Only stockholders of record at the close of business on
April 15, 2008 will be entitled to vote at the Meeting. Stockholders are
entitled to one vote per share. All stockholders have cumulative voting rights
with respect to the election of Directors, which means that a stockholder's
total vote (number of shares held multiplied by the number of Directors to be
elected) may be cast entirely for one nominee or distributed among two or more
nominees. The Board of Directors is soliciting discretionary
authority to cumulate votes. The vote of the holders of a majority of the Common
Stock voting at the Meeting will be sufficient to take action on all
matters. As brokers will have discretionary voting power on
matters voted at the Meeting there will be no broker non-votes for such
matters.
For purposes
of determining the number of votes cast, only those cast “For” or “Against” are
included. Under Securities and Exchange Commission, or SEC, rules,
boxes and a designated blank space are provided on the proxy card for
stockholders to mark if they wish to abstain from voting for one or more
nominees for Director. In accordance with New York State law, such abstentions
of authority are not counted in determining the votes cast in connection with
the election of one or more of the nominees for Director.
1.
ELECTION OF DIRECTORS
The persons
named in the accompanying Proxy, unless otherwise instructed, intend to vote
shares in favor of the election as Directors for the ensuing year of the
Nominees named below, and will be entitled to vote cumulatively in respect of
any such nominees. In case any of those named should become
unavailable to serve, it is intended that votes may be cast for a
substitute. Vernon R. Alden, a Director since 1978, will not stand
for re-election to the Board and the Board has taken action to reduce the size
of the Board from 10 Directors to 9. The Board of Directors of the
Company has no reason to believe the persons named will be unable or decline to
serve if elected.
Nominees
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Name, Age and
Principal Occupation
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Common Stock
(2
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George
S.
Abrams
Age:
76; Director since May 1995;
Attorney . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Mr.
Abrams has been an attorney associated with the law firm Winer and Abrams,
Boston, Massachusetts for more than 25 years. He formerly served as
General Counsel and Staff Director of the United States Senate Judiciary
Subcommittee on Refugees. Mr. Abrams is a Director of Viacom,
Inc. and of National Amusements, Inc. Mr. Abrams also serves as
a trustee and on the Visiting Committees of a number of cultural,
arts-related and educational institutions, including the Museum of Fine
Arts, in Boston, and Harvard University.
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1,070
(Less
than .1%)
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Joseph
L.
Bower
Age:
69; Director since May 1984;
Baker Foundation Professor of
Business Administration, Harvard Business School . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
Mr.
Bower has been a member of the faculty of the Harvard Business School
since l963 and has served as Senior Associate Dean for External Relations,
Chair of the Doctoral Programs, Director of Research, and currently chairs
The Corporate Leader Program. Mr. Bower is a Director of ANIKA
Therapeutics, Inc., Brown Shoe Co., Inc., New America High Income Fund,
and Loews Corporation; he is a trustee of the TH-Lee Putnam Emerging
Opportunities Portfolio; and he is Life Trustee of the New England
Conservatory of Music, and a trustee of the DeCordova and Dana Museum and
Sculpture Park. He has published extensively on strategy, organization,
and leadership.
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400
(Less
than .1%)
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Nominees
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Name, Age and
Principal Occupation
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Common Stock
(2)
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Charles
J.
Clark
Age: 59;
Director since May 2003;
Vice
President for Asset Development, YouthBuild USA . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
Mr.
Clark is Vice President for Asset Development at YouthBuild USA, a
non-profit organization that assists out of work and out of school young
adults. Prior to joining YouthBuild, Mr. Clark was a Senior
Vice President, Commercial Banking, with USTrust and Citizens Bank of
Massachusetts from 1986 to January 2003, and has more than 30 years of
experience in banking. Mr. Clark serves on several
non-profit boards and committees. He is the Board Chair of
Boston Community Capital, a member of the board of directors of Junior
Achievement Eastern Massachusetts, and a trustee of the New England
College of Optometry. Mr. Clark is a member of the
Finance and Administration Committee of the United Way of Massachusetts
Bay. He is a former Trustee of the New England College of
Finance; a former Board Member of Jobs For Youth; a former Board Member of
the Massachusetts Alliance for Small Contractors; a former member of the
Investment Committee of the Property and Casualty Initiative; a former
Board Member of Massachusetts Certified Development Corporation; and a
former Board Member of YouthBuild USA.
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504
(Less
than .1%)
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Irma
Fisher
Mann
Age: 69;
Director since May 2007;
President of IRMA,
Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Over
the past 30 years, Ms. Mann has worked in the hotel and hospitality
industry, consulting with clients in marketing, branding and
advertising. Between the two companies she founded, Irma, Inc.
and ISM
Strategic Marketing, Inc
,
her clients included
26 Four Seasons Hotels, Worldwide; 300 Sheraton Hotels; Sonesta
International Hotels Corporation; Best Western Worldwide, the
City of Hong Kong, and The Islands of the Bahamas, among
others. For the past 10 years, she has served as Advisory Board
Chairman of Boston University’s School of Hospitality, where she was also
an adjunct professor. Ms. Mann has been honored by HSMAI and
received its Koehl Award for lifetime achievement in hospitality, the
highest award given by the hotel industry. She currently
serves as a Trustee of Tufts Medical Center and is Chairman of its Board
of Governors.
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None
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Nominees
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Name, Age and
Principal Occupation
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Common Stock
(2)
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Peter
J. Sonnabend
(3)
Age: 54;
Director since May 1995;
Chief Executive Officer and
Vice Chairman, Sonesta International Hotels Corporation . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After
graduating from Wesleyan University and Boston University School of
Law, Mr. Sonnabend practiced law with the Boston law firm of Winer and
Abrams from 1980 to 1987. In March 1987, he joined the Company as Vice
President and Assistant Secretary, in May 1987 he became Vice President
and Secretary, and in May 1995 was named Vice Chairman. He also
represented the Company as General Counsel. In December 2003,
Mr. Sonnabend was named Chief Executive Officer and Vice
Chairman. Mr. Sonnabend is involved in a number of civic and
community organizations.
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206,412
(5.6%)
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Roger
P.
Sonnabend (3)
Age: 82;
Director since May 1959;
Executive Chairman of the
Board, Sonesta International Hotels Corporation . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
Mr.
Sonnabend, a graduate of the Massachusetts Institute of Technology and
Harvard Business School, became a Vice President of the Company
in 1956 after ten years of hotel managerial experience. Subsequently, he
was Executive Vice President and from 1963 to 1970 was President of the
Company. Since June 1970, Mr. Sonnabend has been Chairman of the Board and
from January 1978 until November 1983 he also held the office of
President. He served as the Company’s Chief Executive Officer
and Chairman of the Board until December 2003, when he was named Executive
Chairman of the Board. He is involved with many professional, business,
community and educational institutions.
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165,617
(4.5%)
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Stephanie
Sonnabend (3)
Age: 55; Director
since January 1996;
Chief Executive Officer and
President, Sonesta International Hotels Corporation . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms.
Sonnabend graduated from Harvard University, in 1975, and The MIT
Sloan School of Management, in 1979. She joined the Company in 1979 and
held various managerial positions including Vice President of Sales, Vice
President of Marketing, and Executive Vice President. In January 1996, she
became President of the Company, and, in December 2003, was named Chief
Executive Officer and President. Ms. Sonnabend serves on the
Board of Directors of Century Bancorp and Century Bank and Trust, and the
Board of Trustees of New England Conservatory.
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255,750
(6.9%)
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Nominees
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Name, Age and
Principal Occupation
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Common Stock
(2)
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Stephen
Sonnabend
(3)
Age: 76; Director from April 1964 – May 2004; May 2005 – May 2006 and
since May 2007;
Senior Vice
President, Sonesta International Hotels Corporation. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
Mr.
Sonnabend has served as General Manager of the Royal Sonesta Hotel in
Cambridge and the Sonesta Beach Resort in Key Biscayne. In
1970, he became Senior Vice President of the Company.
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74,974
(2.0%)
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Jean
C.
Tempel
Age:
65; Director since September 1995;
Managing
Director, First Light Capital . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
Ms.
Tempel is Managing Partner of First Light Capital, a venture capital
group, formerly Special Limited Partner, TL Ventures (1996-1998); General
Partner, TL Ventures (1994-1996); and President and Chief Operating
Officer of Safeguard Scientifics, Inc., a public technology business
incubator company (1991-1993). Ms. Tempel is a member of the
President’s Council of the Massachusetts General Hospital. Ms.
Tempel currently holds Directorships at JBC Golf, Inc., United Way of
Massachusetts Bay, and The Commonwealth Institute. Ms Tempel is
a Trustee of Connecticut College, as well as Vice Chair of the Board and
Chair of the Finance Committee. She is also a Trustee of
Northeastern University, and Chair of the Subcommittee on Funds and
Investments. Ms. Tempel is a graduate of Connecticut College
and holds a Master of Science degree from Rensselaer Polytechnic
Institute. She is also a graduate of the Advanced Management
Program at Harvard Business School.
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10,000
(.3%)
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(1)
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Shares
are considered beneficially owned for the purposes of this Proxy Statement
if held by the person indicated as beneficial owner, or if such person,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has the power to vote, to direct the voting of
and/or to dispose of or to direct the disposition of, such security, or if
the person has the right to acquire beneficial ownership within sixty (60)
days.
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(2)
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As
of April 1, 2008 the nominees listed in the table above beneficially owned
an aggregate of 714,727 shares of the Company's Common Stock, representing
20% of that class of equity
securities.
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(3)
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Roger
and Stephen Sonnabend are brothers. Stephanie Sonnabend is the
daughter of Roger Sonnabend. Peter J. Sonnabend is the nephew
of Roger and Stephen Sonnabend.
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Our
Board recommends a vote "FOR" the election of each of the
nominees.
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INFORMATION
RELATIVE TO THE BOARD OF DIRECTORS
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AND
CERTAIN OF ITS COMMITTEES
Determination
of Independence
The Company’s
stock is listed on the NASDAQ Global Market under the symbol SNSTA. Under
current NASDAQ rules, a Director of the Company qualifies as “independent” only
if he or she is not an officer or employee of the Company or its subsidiaries
and, in the opinion of the Company’s Board of Directors, he or she does not have
any other relationship which would interfere with the exercise of independent
judgment in carrying out the responsibilities of a Director. In
addition, Directors will not be independent if they meet certain categorical
standards in the NASDAQ rules. In evaluating potentially material
relationships, the Company’s Board of Directors considers commercial, banking,
legal, accounting, charitable and familial relationships, among others. The
Company’s Board of Directors has determined that none of Messrs. Alden,
Abrams, Bower and Clark, nor Mmes. Mann and Tempel, has a material relationship
with the Company, and each of these Directors is “independent” as determined
under NASDAQ rules and SEC rules and regulations.
Although Mr. Abrams received compensation for legal
services provided to the Company, in 2007, the amount of that compensation,
$42,000, was not deemed by the Board to be material enough to affect Mr. Abrams’
independence
Nominating
and Corporate Governance Committee and Director Candidates
The Company's
Board of Directors has a Nominating and Corporate Governance Committee
consisting of Messrs. Bower, Alden, and Clark, all of whom are independent
Directors. Mr. Bower serves as Chairman of this Committee. The
functions of this Committee include consideration of the composition of the
Board of Directors, recommendation of individuals for election as Directors of
the Company, and developing procedures and guidelines regarding corporate
governance issues. (The Nominating and Corporate Governance Committee
operates under a written charter, available on the Company’s
website: www.Sonesta.com.)
The Company’s
stockholders may recommend Director candidates for inclusion by the Board of
Directors in the slate of nominees the Board of Directors recommends to the
Company’s stockholders for election. The qualifications of recommended
candidates will be reviewed by the Nominating and Corporate Governance
Committee. If the Board of Directors determines to nominate a
stockholder-recommended candidate and recommends his or her election as a
Director by the stockholders, the name will be included in our proxy card for
the Annual Meeting of Stockholders at which his or her election is
recommended.
Stockholders
may recommend individuals for the Nominating and Corporate Governance Committee
to consider as potential Director candidates by submitting their names, together
with appropriate biographical information and background materials and a
statement as to whether
the stockholder or group
of stockholders making the recommendation has beneficially owned more than 5% of
the Company’s stock for at least a year as of the date such recommendation is
made to the “Sonesta Nominating and Corporate Governance Committee” c/o Office
of the Secretary, Sonesta International Hotels Corporation, 116 Huntington
Avenue, Floor 9, Boston, Massachusetts 02116. The Nominating and Corporate
Governance Committee will consider a proposed Director candidate only if
appropriate biographical information and background material is provided. The
process followed by the Nominating and Corporate Governance Committee to
identify and evaluate candidates includes requests to Board of Directors members
and others for recommendations, meetings from time to time to evaluate
biographical information and background material relating to potential
candidates, and interviews of selected candidates by members of the Nominating
and Corporate Governance Committee and the Board of Directors. Assuming that
appropriate biographical and background material is provided for candidates
recommended by stockholders, the Nominating and Corporate Governance Committee
will evaluate those candidates by following substantially the same process, and
applying substantially the same criteria, as for candidates submitted by Board
of Directors members.
In evaluating
a candidate’s experience and skills, the Nominating and Corporate Governance
Committee may also consider qualities such as an understanding of the hotel
industry, marketing, finance, regulation and public policy and international
issues. In evaluating a candidate’s independence, the Nominating and Corporate
Governance Committee will consider the applicable independence standards of the
NASDAQ Stock Market and such other factors as the Committee deems appropriate.
The Nominating and Corporate Governance Committee will evaluate each Director
candidate in the context of the perceived needs of the Board of Directors and
the best interests of the Company and its stockholders. The Nominating and
Corporate Governance Committee does not assign specific weights to particular
criteria and no particular criterion is necessarily applicable to all
prospective nominees. The Company believes that the backgrounds and
qualifications of Directors, considered as a group, should provide a significant
composite mix of experience, knowledge and abilities that will allow the
Company’s Board of Directors to fulfill its responsibilities.
Audit
Committee
The Company's
Board of Directors has an Audit Committee consisting of Messrs. Alden, Bower and
Clark and Ms. Tempel. All members of the Committee are independent
Directors. Mr. Clark serves as Chairman of this Committee, which
meets periodically with the Company's management and independent registered
public accounting firm to assure that they are carrying out their
responsibilities. Additionally, this Committee assists the Board of
Directors in overseeing the integrity of the Company’s financial statements, the
Company’s compliance with legal and regulatory requirements, the review of
related person transactions and the performance of the Company’s internal audit
function and independent auditors. (The Audit Committee operates
under a written charter, available on the Company’s
website: Sonesta.com.)
Executive
Committee
The Company's
Board of Directors has an Executive Committee consisting of Messrs. Bower, Roger
P. Sonnabend, Stephen Sonnabend and Ms. Tempel. The Committee has the
authority, except as proscribed by law, to exercise the powers of the Directors
in the management of the business affairs and property of the Company during the
intervals between the meetings of the Board of Directors.
Compensation
Committee
The Company's
Board of Directors has a Compensation Committee consisting of Messrs. Abrams,
Alden and Bower and Ms. Tempel, all of whom are independent Directors.
Mr. Bower serves as
Chairman of this Committee, which meets periodically to review, consider and
approve the appropriateness of the compensation of the Company's management, and
to review the Company’s policy objectives regarding executive
compensation. Each year, management recommends compensation for
executives and other employees earning more than $100,000 per year to Mr. Peter
J. Sonnabend, CEO and Vice Chairman, and Ms. Stephanie Sonnabend, CEO and
President, who in turn recommend compensation to the
Committee. Changes in compensation from the previous year are
generally based on changes in the cost of living and changes in job
responsibility. The Committee then considers these compensation
recommendations in light of a number of factors, including the executive’s or
employee’s experience, tenure, performance, and the subjective perception of
value the executive or employee creates for the Company. Prior to
approving compensation paid in 2007 to Company executives and employees earning
more than $100,000 per year the Committee reviewed a report it had commissioned
from Buck Consultants, a compensation consultant, which compared the
compensation of Company executives against the compensation paid to executives
in similar positions in companies with revenues less than $500
Million. For 2008, the Committee used 3% as a guideline for salary
increases, except for members of the Sonnabend family for whom no increases were
approved pending a review by HVS, a hospitality consultant retained by the
Committee. (The Compensation Committee operates under a written charter,
available on the Company’s website: Sonesta.com.)
Communications from Stockholders and Other Interested Parties
The Company’s
Board of Directors will give appropriate attention to written communications on
issues that are submitted by stockholders and other interested parties, and will
respond if and as appropriate.
Stockholders
who wish to communicate with the Company’s entire Board of Directors may do so
by writing to Peter J. Sonnabend, Chief Executive Officer and Vice Chairman,
Sonesta International Hotels Corporation, 116 Huntington Avenue, Floor 9,
Boston, Massachusetts 02116. Stockholders who wish to communicate
with individual Directors, should address their communications to David A.
Rakouskas, Secretary, Sonesta International Hotels Corporation, 116 Huntington
Avenue, Floor 9, Boston, Massachusetts 02116. All such
communications will be forwarded by the Secretary directly to the person or
persons for whom they are intended, as identified in the relevant
communication.
Directors'
Attendance and Fees
Directors who
are not salaried employees of the Company (“Outside Directors”) receive annual
compensation of $25,000, and the Chairman of the Audit Committee receives an
additional $5,000. In addition, for attending meetings called
to address non-routine matters, Outside Directors have each received $600 per
meeting.
During 2007
there were eight meetings of the Board of Directors, two meetings of the
Compensation Committee, two meetings of the Audit Committee, and one meeting of
the Nominating and Corporate Governance Committee. The Executive Committee did
not meet during 2007. Each of the nominees attended at least 75% of the total
number of meetings of the Board of Directors and of the committees on which such
Directors served during 2007. The Company has no express policy
regarding Board members’ attendance at its Annual Meeting of Stockholders; all
directors attended the Company’s 2007 Annual Meeting of
Stockholders.
Executive
and Director Compensation
Compensation
Discussion and Analysis
The primary
objective of the Compensation Committee in setting executive compensation is to
assure that the Company continues to attract and retain executives to carry out
the Company’s business in a manner consistent with industry
practice. For this purpose, the Company views “total compensation” as
consisting of base salary, annual cash incentives, and both the Company’s
defined benefit pension plan and, as of January 1, 2007, Company contributions
under the Company’s 401(k) plan. In establishing total compensation
levels, the Compensation Committee considers the advice of management, including
the Company’s senior human resources personnel, and, for 2007, reviewed a report
prepared by Buck Consultants, a compensation consultant retained by the
Committee to review the compensation paid to Company executives.
As part of
the total compensation review process, the Compensation Committee reviews each
element of executive compensation to make sure that, as a whole, it remains
consistent with the Committee’s goals and objectives. For instance,
over the past several years two trends have developed regarding the compensation
paid to Company executives: First, increases in base salary were
based largely on cost of living increases (generally 3% per
year). Second, the Company’s annual cash incentive program yielded
only modest incentive compensation. In light of this, the Committee
approved 5% salary increases for 2007 for most executives who are not members of
the Sonnabend family. Sonnabend family executives received salary
increases ranging from 0% to 2.5%. The Sonnabend family increases
were lower due to management’s recommendation to the Committee that limiting
Sonnabend family salary increases would help slow the growth of Company overhead
and the Committee’s acknowledgement that Sonnabend family members all owned
Company stock on which they received dividend income. For 2008, the
Company’s guideline for salary increases was 3%, except that members of the
Sonnabend family received no salary increases pending advice from a compensation
consultant retained by the Compensation Committee.
Base
Salary.
The Company
generally bases salary on information collected by its human resources
personnel.
Where
available, information particular to the hospitality industry is used, such as
information obtained from other hospitality-related companies and hospitality
consultants. The Company seeks to offer competitive compensation in
order to attract the best available employees. In setting the base
salary amounts for Company executives, including those executive officers named
in the Summary Compensation Table of the proxy statement (each a “Named
Executive Officer” or “NEO”), the Committee considers recommendations from
management, including human resources personnel, which are then communicated to
Mr. Peter J. Sonnabend, CEO and Vice Chairman, and Ms. Stephanie Sonnabend, CEO
and President, and these CEOs seek approval from the Compensation Committee,
which approves adjustments on an annual basis. Base salaries are
evaluated by the Compensation Committee and set by the Committee based on a
collective assessment of factors including experience, tenure, performance, and
the subjective perception of value the executive creates for the
Company. Except for members of the Sonnabend family, in recent years,
base salaries have been increased annually based on cost of living adjustments,
but occasionally have been increased beyond cost of living increases in light of
market conditions, changes in job description or responsibility, or other
factors.
Annual Cash
Incentives.
The Company’s
cash incentive program is described in the proxy statement under the heading
“Incentive Compensation Plan”. For many years, the Company has
maintained a cash incentive program as a way of motivating key employees in the
hotels it operates in the United States and in its Corporate
Office. The Committee oversees this program and annually approves the
profit thresholds established at each participating hotel.
This “Incentive Program”
includes three (3) levels of participation: Groups A, B and
C. Group A provides for the highest level of incentive
compensation. All NEOs are part of Group A and, because awards under
the Incentive Program are based on a percentage of base salary, the NEOs
generally participate on an equal basis based on their individual base
salaries.
Generally,
bonus thresholds for the hotels that participate in the incentive compensation
plan, which thresholds are confidential and proprietary, are set at amounts less
than the amount of pre-tax profits the hotel is forecasting for the upcoming
year, but in excess of the threshold for the prior year. This does
not always apply, however, because circumstances beyond hotel management’s
control can affect results, as was the case in New Orleans following Hurricane
Katrina. The Company expects that its hotels will earn incentive
compensation under the plan each year, resulting in incentive compensation being
earned by NEOs. The Company believes that the incentive compensation
plan represents an important part of “total compensation”, particularly since
the Company does not offer stock options or equity awards.
In 2007, four
of the five hotels in the bonus program surpassed their bonus thresholds and
earned additional amounts based on the qualitative measures described in the
“Incentive Compensation Plan” section of this Proxy. Group A bonuses
averaged 16.8% in 2007. Of this average, 11.5% was attributable to
financial performance, and 5.3% was attributable to certain qualitative
measures, including RevPAR Index comparisons, guest satisfaction, rooms
inspection results, and employee climate surveys. (For further
information, see the section of this Proxy captioned “Incentive Compensation
Plan”.) These criteria, which can account for 8% of a maximum 30% incentive
bonus score, were instituted in order to acknowledge that financial results
alone do not adequately measure a hotel’s performance, and to enable employees
to earn bonuses even if a hotel’s financial results, which may be affected by
circumstances beyond its control, do not meet bonus thresholds. For
the years 2005-2007, Group A bonuses averaged 3.3%, 4.4%, and 16.8%,
respectively. (For 2006, members of the Sonnabend family, all of whom
were in Group A, received bonuses totaling 2.6% because a special bonus awarded
to Royal Sonesta, New Orleans was not factored into their bonus calculations;
and, for 2007, the bonus percentage applied only to the first $200,000 of an
employee’s salary.).
For 2007, the
Committee approved bonuses to the NEOs equal to the average of the bonus
percentage earned by Group A participants in each of the hotels participating in
the Incentive Program, but capped the amount of salary to which the bonus
percentage would apply at $200,000 in order to limit the growth in Company
overhead. As a result, Corporate Group A participants
received Incentive Program compensation equal to 16.8% of 2007 salaries, subject
to the $200,000 cap. The resulting maximum incentive compensation,
$33,600, applied to all NEOs in the Summary Compensation Table that
follows.
Equity Awards/Stock
Options.
For many
years, the Company has not offered an employee stock option program as part of
“total compensation”. The Company’s public stock float is small
compared to most other public companies, and is thinly traded. These
factors limit the value that would be derived by key employees in receiving or
exercising stock options, and the Company believes that it can attract and
retain executives without offering equity awards or stock
options. Therefore, the Compensation Committee has not recommended
that the Company offer equity awards or stock options to any
employees.
Other
Compensation.
The Company
offers certain other perquisites and personal benefits to its
executives. One benefit is complimentary rooms, food and beverages at
Company-owned, operated or franchised hotels, and the use of hotel related
services when on personal travel to encourage executive officers to visit and
personally evaluate Company properties. This and other
perquisites
and/or
personal benefits are reflected in the relevant tables and narratives which
follow. In addition, the executives may participate in Company-wide
plans and programs such as the 401(k) plan (including Company match), group
medical and dental, long-and short-term disability, group life insurance,
accidental death and dismemberment insurance, and health care in accordance with
the terms of the programs.
For several
years, the Board of Directors has included a housing allowance as part of the
total compensation paid to the Executive Chairman, Roger P.
Sonnabend. This housing allowance, which totaled $67,843 in 2007,
ended when Mr. Sonnabend purchased the residence in September 2007.
For many
years the Company has maintained an I.R.S. qualified defined benefit pension
plan which covers all non-union employees at its executive offices and its owned
and leased hotels and certain of its managed hotels. All officers and
Directors who are full-time employees of the Company are covered under this
plan. (The pension plan is discussed further following the “Pension
Benefits Table for 2007”, which follows.) Effective December
31, 2006, the Company froze its pension plan and, as of January 1, 2007, began
providing matching contribution of up to 4% of earnings to employees who make
401(k) contributions.
Compensation
Committee Report
The
Compensation Committee (the “Compensation Committee” or “Committee”), which is
comprised solely of independent members of the Board of Directors, carries out
the Board of Directors’ responsibilities relating to compensation of the
Company’s executive officers. The Committee is responsible for
reviewing and approving corporate goals and objectives relevant to executive
compensation, including salary, bonus and incentive compensation, and evaluating
executive officer performance in light of those goals and
objectives. In this context, the Compensation Committee reviewed and
discussed with management the “Compensation Discussion and Analysis” required by
Item 402(b) of Regulation S-K. Based on this review and discussion,
the Committee recommended to the Board that the “Compensation Discussion and
Analysis” be included in the Company’s Annual Report on Form 10-K and proxy
statement.
The
Compensation Committee:
Joseph L.
Bower, Chairman
George S.
Abrams
Vernon R.
Alden
Jean C.
Tempel
Summary Compensation
Table
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Non-Equity
Incentive Plan Compensation
($)
(1)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
(2)
|
All
Other Compensation
($)
(7)
|
Total
($)
|
|
|
|
|
|
|
|
|
Roger
P. Sonnabend
Executive
Chairman
|
2007
|
418,374
|
N/A
|
33,600
|
0 (3)
|
136,627
(4)
|
588,601
|
2006
|
418,374
|
N/A
|
10,836
|
0 (3)
|
143,065 (4)
|
572,275
|
Peter
J. Sonnabend
CEO
& Vice Chairman
|
2007
|
356,342
|
N/A
|
33,600
|
12,334
|
46,610
|
448,886
|
2006
|
347,651
|
N/A
|
9,004
|
24,038
|
35,214
|
415,907
|
Stephanie
Sonnabend
CEO
& President
|
2007
|
356,342
|
N/A
|
33,600
|
19,171
|
43,669
|
452,782
|
2006
|
347,651
|
N/A
|
9,004
|
24,519
|
38,475
|
419,649
|
Jacqueline
Sonnabend (5)
Executive
Vice President
|
2007
|
333,166
|
N/A
|
33,600
|
13,795
|
47,654
|
428,215
|
2006
|
347,651
|
N/A
|
9,004
|
26,747
|
38,221
|
421,623
|
Felix
Madera
VP
International
|
2007
|
403,065
|
N/A
|
33,600
|
22,164
|
34,493
|
493,322
|
2006
|
403,065
|
15,000
(8)
|
17,800
|
18,666
|
42,121
|
496,652
|
Boy
van Riel (6)
VP
& Treasurer
|
2007
|
207,900
|
N/A
|
33,600
|
(4,522)
|
37,155
|
274,133
|
2006
|
198,000
|
N/A
|
8,744
|
11,922
|
27,305
|
245,971
|
___________
(1)
|
The
Corporate Group A incentive plan percentage for 2007 was
16.8%. For 2007, incentive bonuses were calculated on the first
$200,000 of a corporate employee’s salary only. For 2006, the
Corporate Group A plan percentage was 4.4%, except for Sonnabend family
members, who received 2.6%.
|
(2)
|
Consists
of amounts attributable to the Sonesta International Hotels Corporation
Pension Plan.
|
(3)
|
This
NEO received a lump sum prior to 2006 which was based on years in which
the earnings for pension calculation purposes were not capped by IRS
regulations. Since this NEO was fully vested at the time of the
lump sum payout, and the current compensation under IRS Section 401(a)(17)
limits would result in a lower average 5-year earnings figure, no
additional benefit has accrued on an actuarial basis for the years ended
December 31, 2007 and 2006.
|
(4)
|
Includes
$67,843 and $102,657 for housing benefits in 2007 and 2006,
respectively.
|
(5)
|
This
NEO’s salary reflects a 10% reduction due to a 90% work schedule for the
period January through May 2006.
|
(6)
|
This
salary reflects a 10% reduction due to this NEO’s 90% work schedule for
both 2007 and 2006.
|
(7)
|
Other
compensation includes matching contributions under the Company’s 401(k)
Plan starting as of January 1, 2007; the Company’s share of
health insurance premiums (including executive medical plan
reimbursements); 100% of the annual lease value of the automobile used by
the executive; and telephone/Blackberry
costs.
|
(8)
|
This
bonus was paid in consideration of this NEO’s contributions in helping
Trump International Sonesta Beach Resort (the “Hotel”) achieve Mobil’s
Four Star designation, in November 2006. This NEO has direct
supervisory responsibility over the Hotel. No other NEO had a
similar level of responsibility for the Hotel’s Mobil rating to warrant a
bonus in the opinion of the Board of
Directors.
|
Grants
of Plan-Based Awards
|
|
Estimated Future
Payouts Under Non-Equity Incentive Plan Awards
(1)
|
|
|
|
|
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
(2)
|
Maximum
($)
(2)
|
|
|
|
|
|
Roger
P. Sonnabend
Executive
Chairman
|
2007
|
0
|
60,000
|
60,000
|
Peter
J. Sonnabend
CEO
& Vice Chairman
|
2007
|
0
|
60,000
|
60,000
|
Stephanie
Sonnabend
CEO
& President
|
2007
|
0
|
60,000
|
60,000
|
Jacqueline
Sonnabend
Executive
Vice President
|
2007
|
0
|
60,000
|
60,000
|
Felix
Madera
VP
International
|
2007
|
0
|
60,000
|
60,000
|
Boy
van Riel
VP
& Treasurer
|
2007
|
0
|
60,000
|
60,000
|
(1)
|
The
targets for award purposes vary per property that participates in the
Incentive Compensation Plan. NEO bonuses are based on a
composite of individual hotel results. (For further information
see the section “Incentive Compensation Plan”, that
follows.)
|
(2)
|
For
2007, 30% of base salary, up to $200,000 was the maximum award an NEO
could have received. The actual percentage awarded was
16.8%.
|
Incentive
Compensation Plan
The Company
has an incentive compensation plan under which pre-tax profit thresholds are
established at the beginning of each year for its managed domestic hotels.
Through 2001, the plan provided that once the profit threshold was reached at a
hotel, key employees of that hotel were entitled to receive a cash bonus equal
to 3% of their annual salary, and 10% of any profits in excess of the threshold
were shared proportionally by the same group. Additionally, key employees of
each hotel could receive a bonus of up to two percentage points based on an
evaluation of that hotel's performance in the areas of personal service and
hotel physical appearance. The total incentive bonus paid out during each year
was capped at 25% of base salary. Executive office key employees,
including officers of the Company, were entitled to receive incentive payments
equal to that percentage of their respective salaries which equaled the average
(as a percentage of salaries) of all incentive payments made to certain hotel
key employees as a group. As noted previously, the incentive
compensation plan (“Incentive Program”) includes three (3) levels of
participation: Groups A, B and C. Group A provides for the
highest level of incentive compensation. All NEOs are part of Group A
and, because awards under the Incentive Program are based on a percentage of
base salary, the NEOs generally participate on an equal basis based on their
individual base salaries.
Because of
reduced business levels experienced by the Company since 2001 (in the aftermath
of 9/11), revisions were made to the incentive compensation plan for the years
2002 through 2006. Under the revised plan, thresholds were established as usual,
but the base bonus amounts and the percentage participation in excess profits
were reduced. In addition, the executive office key employees’ bonus
participation was reduced by eliminating certain components from the hotel bonus
calculations which are used as a basis to compute the bonuses for the key
executive office employees. The aforementioned changes reduced annual
incentive compensation expense from an average of approximately $1,600,000
during the years 1998, 1999 and 2000 to an average of approximately $444,000
during the years 2001-2006. In 2007, the incentive compensation plan
was revised (see below), and the incentive compensation expense totaled
$1,193,000.
For 2006,
bonus thresholds were not set for the Company’s two hotels in New
Orleans. In the wake of Hurricane Katrina, it was difficult to
forecast to what extent and how soon business would return to the
City. In early 2007, the Company’s Board of Directors noted the
exceptional performance of the Royal Sonesta Hotel and awarded a special 11%
bonus to Hotel management. That special bonus was included in
calculating Corporate incentive compensation, except for members of the
Sonnabend family. No special bonus was awarded to Chateau Sonesta
Hotel management.
For 2007, the
Company adopted a revised incentive compensation plan for its
hotels. Under the new plan the profit-based portion of the bonus,
which is paid out of 10% of profits in excess of the hotel’s profit thresholds,
was a maximum of 22% of salary for the highest level of hotel employee
participants (Group A). Satisfying a variety of qualitative measures
could result in up to another 8% of salary. These qualitative
measures include the hotel’s RevPAR Index compared to the hotel’s competitive
set, guest satisfaction scores, room inspection results and employee climate
surveys. With minor adjustments, this same incentive compensation
plan was approved for 2008. Under the formula for calculating
Corporate incentive plan bonuses for 2008, NEOs, as in the past, will
participate in the Company’s Corporate Group A incentive compensation plan, and
will receive the average of the bonus percentages earned by participants in the
Group A program in each of the participating hotels. Similar to 2007,
for 2008 the Compensation Committee capped the portion of salary on which
incentive compensation is calculated. For 2008, the cap is
$225,000. (See also the section captioned “Annual Cash Incentives”,
above.)
Pension
Benefits
|
|
Name
|
Plan
Name (1)
|
Number
of Years Credited Service
(#)
|
Present
Value of Accumulated Benefit
($)
|
Payments
During Last Fiscal Year
($)
|
|
|
|
|
|
Roger
P. Sonnabend
|
Sonesta
Pension Plan
|
27
|
0
|
0
|
Peter
J. Sonnabend
|
Sonesta
Pension Plan
|
19
years 10 months
|
426,441
|
0
|
Stephanie
Sonnabend
|
Sonesta
Pension Plan
|
27
years 6 months
|
616,379
|
0
|
Jacqueline
Sonnabend
|
Sonesta
Pension Plan
|
22
years, 11 months
|
487,202
|
0
|
Felix
Madera
|
Sonesta
Pension Plan
|
24
years 11 months
|
770,738
|
0
|
Boy
van Riel
|
Sonesta
Pension Plan
|
25
years 11 months
|
402,790
|
0
|
_____________
(1) The
full name of the pension plan is the Sonesta International Hotels Corporation
Pension Plan.
The
Company has an I.R.S. qualified defined benefit pension plan which covers all
non-union salaried employees at its executive offices and its owned and leased
hotels, and certain of its managed hotels. All officers and Directors who are
full-time employees of the Company are covered under this plan. Benefits under
the plan are based on the average compensation for the highest sixty consecutive
months of service during employment and the employees’ years of
service. Effective January 1, 2006, an employee is eligible to
receive full benefits under the plan after 35 years of service. Prior
to January 1, 2006, employees are eligible for full benefits after 27 years of
service. The plan provides for integration with 50% of the primary
Social Security benefit, reduced proportionately for each year of service less
than thirty five (twenty seven prior to January 1, 2006). It provides
for a normal retirement age of 65 and an early retirement age of 55 with five
years of service. Benefits become vested at normal retirement age or upon the
completion of five years of service and attaining the age of 21. Thus, the
Company is unable to ascertain the benefits which may accrue to its Directors
and/or officers since the benefits are based on variable factors. The
terms of the pension plan, as well as the actuarial assumptions, are further
described in footnote 8 of the Company’s Annual Report filed on Form 10-K for
the year ended December 31, 2007, filed with the SEC on March 25,
2008.
Effective
December 31, 2006, the Company froze its pension plan and, as of January 1,
2007, began providing matching contributions of up to 4% of earnings to
employees who make 401(k) contributions.
Agreements
with NEOs/Potential Payments Upon Termination or
Change-in-Control
|
The Company
entered into Restated Employment Agreements with Roger P. Sonnabend and Stephen
Sonnabend, effective as of January 1, 1992, and amended and updated in March
1996 (Roger, Stephen), which replaced Restated Employment Agreements dated
January 1, 1984, at annual base salaries of at least $418,374 and $280,395,
respectively. The current terms ended December 31, 2002, but automatically renew
for successive one year terms unless terminated by either party. Upon the death
of any of such executives, the Company has undertaken to continue payments to
their respective "Beneficiary" (as defined in each Agreement) in an amount equal
to fifty percent (50%) of the applicable base salary as of the date of death,
for a period of four years following death. Under separate
agreements, dated December 31, 1991, and amended and updated in March 1996, the
Company has agreed that in the event of the permanent and total disability of
Roger P. Sonnabend or Stephen Sonnabend while in the employ of the Company, the
Company will continue payments to such executive in an amount equal to fifty
percent (50%) of the applicable base salary at the date of disability, for a
period of four years following the disability; and if death occurs during
disability, for the balance of the four-year period, to the executive's spouse,
estate or other designated beneficiary. If Roger P. Sonnabend or
Stephen Sonnabend had died or become permanently or totally disabled as of the
last business day of 2007, their Beneficiaries would have received an aggregate
of $ 836,748 and $560,790, respectively, payable in equal semi-monthly
installments through the end of 2011. No other NEOs have any
employment or severance arrangements with the Company.
Director
Compensation
|
|
Name
|
Fees
Earned or Paid in Cash ($)
|
All
Other Compensation ($)
|
Total
($)
|
|
|
|
|
George
S. Abrams
|
28,600
|
0
|
28,600
|
Vernon
R. Alden
|
27,400
|
0
|
27,400
|
Joseph
L. Bower
|
27,400
|
0
|
27,400
|
Charles
J. Clark
|
33,600
|
0
|
33,600
|
Irma
F. Mann
|
20,100
|
|
20,100
|
Jean
C. Tempel
|
28,000
|
0
|
28,000
|
Directors who
are not full-time employees of the Company receive fees totaling $25,000 per
year, except the Chairman of the Audit Committee who receives an additional
$5,000. Ms. Mann received a pro-rated amount since she joined the
Board of Directors on May 10, 2007. In light of the addition of six
special meetings held during 2007, it was agreed that outside Directors should
receive an additional $600 for each of these meetings
attended. Outside Directors are also allowed complimentary or
discounted stays and meals at Company hotels.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee of the Company's Board of Directors consisted of Vernon
R. Alden, Joseph L. Bower, and Jean C. Tempel throughout 2007. No
member of the Compensation Committee is an employee of the Company or its
subsidiaries.
Related
Person Transactions
The Company
has purchased artwork for its hotels and executive offices from Obelisk Gallery,
Inc., a corporation owned by Mrs. Roger Sonnabend. Purchases of artwork for the
Company from January 1, 2007 through March 1, 2008, totaled
$18,500. Obelisk Gallery also handled the sale of 6 pieces of artwork
totaling $276,100 during 2007. The Audit Committee of the Company’s
Board of Directors has instituted policies and procedures to assure that the
prices paid for artwork acquired from Obelisk Gallery (and the prices realized
from sales of artwork to Obelisk Gallery) are at least as favorable to the
Company as would have been obtained from unrelated third
parties. These policies and procedures include obtaining valuation
advice from a qualified third party expert for any individual piece of art which
the Company purchased or sold for more that $10,000, as well as certain other
less costly artwork as the Audit Committee deems
appropriate. Following such steps and review, the Audit Committee
considers whether or not to approve the purchases, all of which since January 1,
2007 have been so approved.
The Company
leases space in a personal residence, in Boston, owned by Mrs. Roger Sonnabend,
for the exclusive use of Roger Sonnabend, Executive Chairman of the
Board. The amount paid as rent in 2007 totaled
$14,400. This arrangement has been in place for several years and has
been ratified and approved by the Audit Committee.
During the
summer of 2007, the Company was offered the opportunity to purchase the
residential property in Key Biscayne, Florida, which it rented for use as a
residence by its Executive Chairman, Roger P. Sonnabend. The Company
declined to acquire the property. Subsequently, the Executive
Chairman and his wife purchased the property and, in connection with that
transaction, the Company’s lease of the property terminated.
In October
2007, the Company entered into a purchase and sale agreement to sell a coop unit
at The Lombardy Hotel, in New York City (the “Unit”), furnished, to the Chief
Executive Officer and Vice Chairman, Peter J. Sonnabend, for
$700,000. This transaction, which closed on March 31, 2008, was
approved by the Company’s Audit Committee and Board of
Directors The Company will report a gain on this transaction
during the first quarter of 2008.
Related party
transactions involving amounts in excess of $120,000 are rare for the
Company. While the Company does not have a written policy regarding
such transactions, any transaction between the Company and a related party
involving a significant amount (which for this purpose would be more than
$120,000) is subject to review and approval by the Audit Committee.
PRINCIPAL
STOCKHOLDERS
Except as set
forth below, the following table sets forth certain information as of April 1,
2008 with respect to the Company’s officers listed in “Summary Compensation
Table” above, the Company’s executive officers and Directors as a group, and
persons known to the Company to be the beneficial owners of more than 5% of the
Company's Common Stock. Ownership information for individual
Directors, and nominees appears on pages 2 to 5.
Name
and Address
|
Number
of Shares
|
Percent
|
of Beneficial
Owner
|
Beneficially Owned
(1)(2)
|
of
Class
|
|
|
|
Felix
Madera
|
0
|
0%
|
|
|
|
Alan
M. Sonnabend
|
256,373
|
6.9%
|
260
Crandon Boulevard
|
|
|
Unit
C-12
|
|
|
Key
Biscayne, FL 33149
|
|
|
|
|
|
Jacqueline
Sonnabend
|
209,556
|
5.5%
|
116
Huntington Avenue
|
|
|
Boston,
MA 02116
|
|
|
|
|
|
Peter
J. Sonnabend
|
206,412
|
5.6%
|
116
Huntington Avenue
|
|
|
Boston,
MA 02116
|
|
|
|
|
|
Roger
P. Sonnabend
|
165,617
|
4.5%
|
116
Huntington Avenue
|
|
|
Boston,
MA 02116
|
|
|
|
|
|
Stephanie
Sonnabend
|
255,750
|
6.9%
|
116
Huntington Avenue
|
|
|
Boston,
MA 02116
|
|
|
|
|
|
Stephen
Sonnabend
|
74,974
|
2.0%
|
|
|
|
Boy
van Riel
|
0
|
0%
|
|
|
|
Vernon
R. Alden
|
5,638
|
.2%
|
|
|
|
Cantor
Fitzgerald Europe (3)
|
300,000
|
8.1%
|
One
America Square
|
|
|
London
EC 3N 2LS
|
|
|
United
Kingdom
|
|
|
|
|
|
Mercury
Real Estate Advisors LLC (4)
|
359,522
|
9.7%
|
Three
River Road
|
|
|
Greenwich,
CT 06807
|
|
|
|
|
|
Mario
J. Gabelli (5)
|
369,988
|
10.0%
|
One
Corporate Center
|
|
|
Rye,
NY 10580
|
|
|
|
|
|
All
executive officers and Directors as group (16 persons
|
|
|
including
those noted above)
|
1,253,510
|
33.9
%
|
_________________
(1)
|
See
note 1 on Page 5.
|
(2)
|
The
Company is not aware that any stock owned or controlled by any officer or
director was pledged as security for any financial
obligation.
|
(3)
|
The
information is as of July 7, 2006 and is based solely on Schedule 13G
filed with the SEC on July 7, 2006 by Cantor Fitzgerald
Europe. The relevant members of the filing group are CF&Co,
LLC, CF&Co Holdings, L.P., CFCO Holdings, LLC, Cantor Fitzgerald,
L.P., CF Group Management, Inc. and Howard W.
Lutnick.
|
(4)
|
The
information is as of February 21, 2008 and is based solely on an Amendment
No. 4 to Schedule 13D filed with the SEC on February 21, 2008 by Mercury
Real Estate Advisors LLC. The relevant members of the filing
group are Mercury Real Estate Advisors LLC, David R. Jarvis and Malcolm F.
MacLean IV, each with the address as stated in this
table. Shares beneficially owned by Mercury Real Estate
Advisors LLC, David R. Jarvis and Malcolm F. MacLean IV represent shares
held by Mercury Special Situations Fund LP, Mercury Special Situations
Offshore Fund, Ltd., Silvercreek SAV LLC, Mercury Special Situations
Leveraged Fund LP, and Mercury Global Alpha Fund LP, of which Mercury Real
Estate Advisors LLC is the investment adviser. Messrs. Jarvis
and MacLean are the managing members of Mercury Real Estate Advisors
LLC.
|
(5)
|
The
information is as of March 26, 2008 and is based solely on an Amendment
No. 3 to Schedule 13D filed with the SEC on March 26, 2008 by Mario J.
Gabelli and various entities which he directly or indirectly controls or
for which he acts as chief investment officer. The relevant
members of the filing group are GGCP, Inc., GAMCO Investors, Inc., Gabelli
Funds, LLC, GAMCO Asset Management, Inc., Teton Advisors, Inc., Gabelli
Securities, Inc., Gabelli & Company, Inc., MJG Associates, Inc.,
Gabelli Foundations, Inc., Mario Gabelli, and LICT
Corporation.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our Directors and
certain officers, and any person who owns more than 10% of a registered class of
our equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of the Company’s Common
Stock. Based upon the information supplied to us by such
persons, we are required to report any known failure to file these reports
within the period specified by the instructions to the reporting
forms. To our knowledge, based upon a review of the Section
16(a) reports furnished to us and the written representation of officers and
Directors, all these filing requirements were timely satisfied by our Directors
and officers and 10% stockholders for the fiscal year ended December 31,
2007.
Audit
Committee Report
The Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the audited financial
statements in the Annual Report with management, including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements.
The Audit
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company’s accounting principles and
such other matters as are required to be discussed with the Audit Committee
under the auditing standards of the Public Company Accounting Oversight
Board. In addition, the Audit Committee has discussed
with the independent auditors the auditors’ independence from management and the
Company, including the matters in the written disclosures required by the
Independence Standards Board, Standard No. 1, “Independence Discussions with
Audit Committees”, and the matters required to be discussed by Statement on
Auditing Standards No. 61, “Communications With Audit Committees”, and
considered the compatibility of nonaudit services with the auditors’
independence, and concluded that such services were acceptable.
The Audit
Committee discussed with the Company’s independent auditors the overall scope
and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company’s internal
controls, and the overall quality of the Company’s financial
reporting. The Audit Committee held two meetings during 2007, and has
held one meeting to date in 2008. In addition, the Chairman of the
Audit Committee meets with management and the Company’s independent auditors to
review the Company’s quarterly reports filed on Form 10-Q.
In reliance
on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors (and the Board of Directors has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2007 for filing with the
SEC. The Audit Committee has also approved the selection of Vitale,
Caturano & Company, Ltd. as the Company’s independent auditors for
2008.
Submitted by
the Audit Committee.
Vernon R.
Alden, Joseph L. Bower, and Charles J. Clark, Chairman, Jean Tempel
April 22,
2008
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Vitale,
Caturano & Company, Ltd. has served as the Company’s independent registered
public accounting firm since 2004. A representative of Vitale,
Caturano & Company Ltd. is expected to be present at the Meeting, with the
opportunity to make a statement if he or she desires to do so. This
representative will be available to respond to appropriate questions from
stockholders who are present at our annual meeting.
The fees for
services provided by Vitale, Caturano & Company, Ltd. to us in the last two
fiscal years were as follows:
|
|
FY 2006
|
|
|
FY 2007
|
|
|
|
|
|
|
|
|
Audit Fees
(1)
|
|
$
|
130,000
|
|
|
$
|
130,000
|
|
Audit
Related Fees (2)
|
|
|
14,000
|
|
|
|
15,000
|
|
Tax
Fees (3)
|
|
|
700
|
|
|
|
1,450
|
|
All
Other Fees (4)
|
|
|
0
|
|
|
|
1,000
|
|
Total
Fees
|
|
$
|
144,700
|
|
|
$
|
147,450
|
|
(1)
|
Audit
fees include the fees paid for the annual audit and the review of
quarterly financial statements.
|
(2)
|
Audit
related fees consist of fees paid for the audit of the Company’s pension
and 401(k) plans.
|
(3)
|
Tax
fees consist of tax-related advisory
fees.
|
(4)
|
Other
fees for 2007 consist of a review of the Company’s allocation of corporate
expenses to its operations in Egypt in connection with the preparation of
foreign tax returns.
|
The Company’s
Audit Committee has established policies and procedures which are intended to
control the services provided by the Company’s auditors and to monitor their
continuing independence. Under these policies, no services may be
undertaken by the Company’s auditors unless the engagement is specifically
pre-approved by the Company’s Audit Committee or the services are included
within a category which has been pre-approved by the Audit
Committee. The maximum charge for services is established by the
Audit Committee when the specific engagement or the category of services is
pre-approved. In certain circumstances, management is required to
notify the Audit Committee when pre-approved services are undertaken and the
Committee or its Chairman may approve amendments or modifications of the
engagement or the maximum fees.
The Company’s
Audit Committee will not pre-approve engagements of the Company’s auditors to
perform non-audit services for the Company if doing so will cause the auditors
to cease to be independent within the meaning of applicable SEC or NASDAQ
rules. In other circumstances, the Audit Committee considers among
other things, whether the auditors are able to provide the required services in
a more or less effective and efficient manner than other available service
providers.
All services
for which the Company engages the auditors are pre-approved by the Audit
Committee. The total fees the Company paid to Vitale Caturano &
Company Ltd. for services in 2006 and 2007 are set forth above.
The Company’s
Audit Committee approved the engagement of Vitale, Caturano & Company Ltd.
to provide audit related and tax services in 2006 and 2007 (which include the
annual audits of the Company’s Pension Plan and 401(k) Plan) because it
determined that for Vitale, Caturano & Company Ltd. to provide these
services would not compromise its independence, and that its familiarity with
the Company’s record keeping and accounting systems would permit them to provide
these services with equal or higher quality, more quickly and at a cost similar
to what the Company could obtain these services from other
providers.
STOCKHOLDER
PROPOSALS
Proposals
that stockholders intend to present at the next Annual Meeting of Stockholders
must comply with Rule 14a-4 under the Securities Exchange Act of 1934 and must
be received at the principal executive offices of the Company, 116 Huntington
Avenue, Floor 9, Boston, Massachusetts 02116, Attention: David
Rakouskas, Secretary, not later than March 4, 2009.
A stockholder
who intends to present a proposal at the 2009 Annual Meeting of Stockholders for
inclusion in the Company’s proxy materials relating to that meeting must comply
with Rule 14-8 under the Securities Exchange Act of 1934 and must submit the
proposal by December 19, 2008. In order for the proposal to be
included in the proxy statement, the stockholder submitting the proposal must
meet certain eligibility standards and comply with the requirements as to form
and substance established by applicable laws and regulations. The
proposal must be mailed to David A. Rakouskas, Secretary, Sonesta International
Hotels Corporation, 116 Huntington Avenue, Floor 9, Boston,
Massachusetts 02116.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
Some banks,
brokers and other nominee record holders may participate in the practice of
“householding” proxy statements and annual reports. This means that
unless stockholders give contrary instructions, only one copy of the Company’s
proxy statement or annual report may be sent to multiple stockholders in each
household. The Company will promptly deliver a separate copy of
either document to a stockholder if he or she calls or writes to the Company at
the following address or telephone number: David A. Rakouskas,
Secretary, Sonesta International Hotels Corporation, 116 Huntington Avenue,
Floor 9, Boston, Massachusetts 02116; (617) 421-5453. If a
stockholder wants to receive separate copies of the Company’s proxy statement or
annual report in the future, or is a stockholder is receiving multiple copies
and would like to receive only one copy per household, he or she should contact
his or her bank, broker or other record holder, or he or she may contact the
Company at the above address or telephone number.
MISCELLANEOUS
The Board of
Directors does not know of any matters, other than those discussed in this Proxy
Statement, which may come before the Meeting. However, if any other matters are
properly presented at the Meeting, it is the intention of the persons named in
the accompanying Proxy to vote, or otherwise act, in accordance with their
judgment on such matters.
By Order
of the Board of Directors
DAVID
A. RAKOUSKAS
Secretary
Dated:
April 22, 2008
The
Board of Directors hopes that all stockholders will attend the Meeting. In the
meantime, you are requested to execute the accompanying Proxy and return it in
the enclosed envelope. Stockholders who attend the Meeting may vote their stock
personally even though they have sent in their Proxies.