UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14a-101)

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.        )

 

 

 

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Park Hotels & Resorts Inc.

 

 

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		March 16, 2022

Dear Fellow Stockholder:

It is our pleasure to cordially invite you to attend the annual meeting of stockholders of Park Hotels & Resorts Inc. to be held on Wednesday, April 27, 2022 at 11:30 a.m., Eastern Time, at 1775 Tysons Blvd, Tysons, Virginia 22102.

We recently celebrated Park’s fifth anniversary as a publicly traded company. As I think of all we have accomplished since January 2017, I am most proud of how remarkably the entire Park team has navigated the unprecedented environment of the past two years. Our team has worked tirelessly, but with laser focus and discipline, to create a roadmap for survival, recovery and future success. While the challenges posed from the evolving COVID-19 virus have shifted throughout the pandemic, the Park team has continually adapted and found ways to execute on our near-term priorities to bring the Company back to break-even in 2021, strengthen our balance sheet and continue to build a foundation for long-term success.

Pivoting from Survival to Recovery

Coming off one of the most challenging and disruptive years ever experienced in the lodging and hospitality industry, Park’s operating environment improved notably in 2021. We successfully reopened six hotels, finishing the year with 96% of our portfolio-wide rooms open and just two hotels suspended, and we achieved positive Hotel Adjusted EBITDA for the last three consecutive quarters of the year and positive Adjusted FFO for the last two quarters of 2021, a testament to our disciplined approach to hotel reopenings. We also worked continually to reimagine our operating model to make our operations more efficient. Since the beginning of the pandemic, we eliminated approximately $85 million in operating expenses, the vast majority of which we believe will be permanent. These savings translate to nearly 300 basis points of estimated margin improvement. We believe the changes that we have engineered across our operating platform will lead to a more efficient and tailored operating model going forward, resulting in meaningful value creation.

With improving corporate cash flow, we restarted work on one of our major redevelopment projects in 2021. The $110 million Bonnet Creek meeting space platform expansion and hotel complex renovation recommenced in July 2021, with work expected to be completed by the end of 2023. Once the expansion is complete, the Bonnet Creek complex will offer nearly 300,000 square feet of indoor and outdoor meeting and event space, which will enhance the complex’s ability to accommodate multiple groups and events simultaneously, as well as the larger groups that the Orlando, Florida market attracts.

On the capital recycling front, we opportunistically sold five hotels in 2021, utilizing the proceeds from such sales to pay down $456 million of outstanding bank debt. Since 2018, we have purchased 18 hotels for $2.5 billion and have sold or disposed of 31 assets for approximately $1.7 billion, significantly upgrading the quality of the Park portfolio and adding brand and operator diversity.

Focus on Financial Flexibility

We have worked tirelessly to maximize our financial flexibility. In 2021, we continued efforts to enhance our liquidity through the issuance of $750 million of senior secured notes, bringing the total amount of corporate debt raised since May 2020 to approximately $2.1 billion. These efforts have provided us with near-term liquidity without having to issue dilutive equity, which has been a key priority for us. We have used these funds, along with proceeds from our active capital recycling program, to pay back 97% of our outstanding bank debt, leaving us with

$1.6 billion of liquidity as of year-end 2021 and just 2% of debt maturing through 2022. We believe we are in excellent shape to pursue our internal and external growth strategies.

Strengthening Park’s ESG Culture

Environmental, social and governance (“ESG”) matters were also at the forefront of our 2021 efforts as we firmly believe that ESG success is an important component of our overall success as a company. We published our fourth Annual Corporate Responsibility Report in November, which included our first Task Force on Climate-Related Financial Disclosures (“TCFD”) report to more specifically address climate-related risks to our business. We also responded to our second Global Real Estate Sustainability Benchmark (“GRESB”) Real Estate Assessment and are proud to have made improvements to our performance scores as we continue to advance our environmental efforts.

We also made notable progress on strategic social initiatives throughout 2021. We continued to offer enhanced support for our corporate employees, who largely worked from home for the entirety of the year, by expanding our wellness offerings and resources to focus on mental health and wellbeing. In addition, Park’s Diversity and Inclusion Steering Committee developed actionable areas of focus to ensure that Park’s current and future employee base maintains a strong culture that is supportive of diversity, equity and inclusion.

Finally, we recently amended the charters of our Board committees to formalize and/or expand the Board committees’ oversight of ESG, human capital and risk management matters and more accurately reflect the level of discourse regarding these topics that regularly occurs at the Board and committee levels. We believe that these changes demonstrate our commitment to fostering a strong ESG culture that will directly influence the long-term success of our company.

Brighter Days Expected Ahead and a Sincere Thank You

I believe Park has an incredible platform from which to achieve long-term success. We believe we are poised to see meaningful upside as demand returns to all segments of the lodging industry, and we firmly believe there is significant pent-up demand and strong appetite for travel following an unprecedented two plus years of isolation. We expect to continue to prioritize efforts to reshape the portfolio by capitalizing on healthy demand for non-core assets, using proceeds to reduce leverage or fund actionable acquisition targets that meet our disciplined investment criteria. I am confident in Park’s recovery trajectory, and I am excited for the next phase of our journey.

I also want to take this opportunity to express a heartfelt and sincere thank you to Gordon Bethune, who will not be standing for re-election to the Board at the 2022 annual meeting of stockholders. Gordon has played a critical role on the Board and as Lead Independent Director since the Company’s inception, and his many contributions through our growth over the last five years have been invaluable. We will miss his insight, guidance and sense of humor.

The Annual Meeting of Stockholders

At the annual meeting, you will be asked to (i) elect nine members to serve on our Board of Directors; (ii) approve, on an advisory (non-binding) basis, the compensation of our named executive officers; (iii) ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022; (iv) consider a stockholder proposal regarding equity retention by named executive officers (if properly presented) and (v) conduct such other business as may properly come before the annual meeting or any adjournment or postponement of the annual meeting. The Notice of 2022 Annual Meeting of Stockholders and Proxy Statement accompanying this letter provide further information regarding these proposals.

Your vote is important. The Board of Directors appreciates your continued support and, regardless of whether you plan to participate in the annual meeting, we hope that you will vote as soon as possible.

Sincerely,

 

 

Thomas J. Baltimore, Jr.

Chairman of the Board of Directors,

President and Chief Executive Officer

		NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS

 

Date and Time Wednesday, April 27, 2022 at 11:30 a.m. (Eastern Time)		Location 1775 Tysons Blvd. Tysons, VA 22102		Who Can Vote Stockholders of record as of the close of business on March 4, 2022 will be entitled to notice of and to vote at the 2022 annual meeting of stockholders and any adjournment or postponement of the annual meeting

 

Proposals That Require Your Vote				Board Recommendation
1		Vote on the election of nine director nominees named in this Proxy Statement		FOR each nominee
2		Approve, on an advisory (non-binding) basis, our named executive officer compensation		FOR
3		Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022		FOR
4		Consider a stockholder proposal regarding equity retention by named executive officers, if properly presented at the meeting		AGAINST

Stockholders will also transact such other business as may properly be brought before the meeting or any adjournment or postponement thereof by or at the direction of the Board of Directors.

Your vote is important. Even if you plan to attend the annual meeting in person, we encourage you to submit your vote as soon as possible through one of the methods below to ensure your vote is recorded properly. Stockholders of record may vote without attending the annual meeting by one of the following methods:

 

		Mail If you received printed proxy materials, mark, sign, date and return the enclosed Proxy Card or Voting Instruction Form in the postage-paid envelope				Telephone 1-800-690-6903				Internet https://www.proxyvote.com

These proxy materials are first being sent (or, as applicable, made available) to stockholders commencing on March 16, 2022.

If you want to attend the annual meeting in person, please follow the instructions on page 83 of this Proxy Statement.

BY ORDER OF THE BOARD OF DIRECTORS,

 

 

 

		Nancy M. Vu Senior Vice President, General Counsel and Secretary March 16, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2022. This Proxy Statement and our 2021 Annual Report are available free of charge at www.proxyvote.com

 

 

TABLE OF CONTENTS

 

 

This Proxy Statement contains forward-looking statements regarding Park’s current expectations within the meaning of the applicable securities laws and regulations. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the risks detailed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Risk Factors section of Park’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

PARK BUSINESS HIGHLIGHTS		Park Hotels & Resorts Inc. (“Park,” the “Company,” “we” or “our”) is the second largest publicly-traded lodging real estate investment trust (“REIT”), comprised of a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value. As of March 16, 2022, our portfolio consists of 54 premium-branded hotels and resorts with approximately 32,000 rooms, located in prime city center and resort locations.

OUR STRATEGY

As Park celebrates its 5^th anniversary since we emerged as an independent, publicly-traded company following the spin-off (referred to in this Proxy Statement as the “Spin-off”) from Hilton Worldwide Holdings Inc. (“Hilton”), we remain laser-focused on delivering superior, risk-adjusted returns to stockholders through active asset management and a disciplined external growth strategy, while maintaining a strong and flexible balance sheet. The key pillars of our corporate strategy are:

 

 

OUR PORTFOLIO

 

 

 

2

2021 BUSINESS HIGHLIGHTS

While Park continued to face unprecedented operating complexities in 2021 as a result of the COVID-19 pandemic, the Park team worked tirelessly and with steadfast discipline to navigate this challenging environment. After deliberate evaluation, the Park team took substantial and decisive actions in 2021 that we believe should further stabilize the business and position Park to capitalize on the expected recovery and return to normalcy.

 

Reopening the Park Portfolio

Reinvesting in the Portfolio

Strengthening our Balance Sheet

Reimagining the Operating Model

Successfully reopened six hotels during 2021, including the almost 1,900 room New York Hilton Midtown, resulting in 96% of the Company’s portfolio being open and only two of our hotels still suspended.

Recommenced $110 million expansion project at the Bonnet Creek complex to add more than 100,000 square feet of meeting and event space, which is expected to be completed by the fourth quarter of 2023.

Issued an aggregate of $750 million of senior secured notes and utilized the net proceeds to repay outstanding bank debt by approximately $737 million.   Completed the sales of five hotels for total gross proceeds of approximately $477 million and utilized the net proceeds to repay outstanding bank debt by $456 million, leaving just $78 million outstanding on Park’s sole remaining corporate term loan and no amounts outstanding on its revolving credit facility at December 31, 2021.

Targeted the elimination of $85 million of operating expenses since the start of the pandemic by recognizing operating efficiencies across the portfolio, translating into an estimated 300 basis points of estimated margin improvement.

2021 FINANCIAL HIGHLIGHTS*

 

 

* Please refer to the Financial Reporting Annex included in this Proxy Statement for related definitions and reconciliations to the most directly comparable U.S. GAAP financial measures.

For more information on our 2021 results and other related financial measures, see our 2021 Annual Report, which can be found under the Financial Information tab of our website at pkhotelsandresorts.com/investors.

 

3

PARK CORPORATE RESPONSIBLITY		Over the last two years, the various challenges posed by the COVID-19 pandemic were unprecedented in nature. However, Park’s established ESG framework guided our efforts to protect our assets and support our stakeholders throughout the pandemic. As we continue to navigate the COVID-19 pandemic and plan for the future, we strongly believe that consistently upholding Park’s corporate responsibility principles is critical to supporting both our business and our stakeholders.

OUR CORPORATE RESPONSIBILITY FRAMEWORK AND STRATEGY

Park’s corporate responsibility strategy has been formalized based on the identification of both (i) pertinent risks and opportunities to our business and (ii) an obligation to act responsibly as a company. Effectively managing these risks and opportunities helps Park achieve operational excellence. We organize the ESG risks and opportunities that we focus on into three main categories– Responsibility in Risk Management, Social Commitment and Environmental Management – which align with our selected UN Sustainable Development Goals.

2021 COMPANY HIGHLIGHTS

 

 

For more information on Park’s corporate responsibility initiatives, see our 2021 Annual Corporate Responsibility Report, which can be found under the Responsibility page of our website at pkhotelsandresorts.com/responsibility.

 

4

RISK MANAGEMENT

Park aims to mitigate the various risks associated with its business and evaluate ESG-related opportunities that support Park’s business strategy through its established risk management reporting structure. To further support this structure, Park has recently formed an Environmental, Social & Governance Committee (the “ESG Committee”), which currently includes four members of our management committee comprised of department leaders (our “Executive Committee”), is subject to the oversight by the Board’s Nominating, Governance & Corporate Responsibility Committee (the “Governance Committee”) and is tasked with developing, implementing and monitoring the Company’s ESG initiatives and policies.

As set forth in the illustration below, each ESG-initiative begins with analysis and work being performed by one of Park’s three dedicated ESG working committees – the Green Park Committee, the Park Cares Committee and the Diversity and Inclusion Steering Committee. Each of these committees is comprised of a cross-departmental team of associates and senior leaders, including at least one Executive Committee leader. Each committee specializes in specific ESG matters and provides both written and verbal updates to our newly-formed ESG Committee on at least a quarterly basis. In addition, at least annually, a member of the ESG Committee provides ESG updates to the Governance Committee, which was recently renamed in order to formalize and expand on its role in overseeing the Company’s ESG performance, disclosure, strategies, goals and objectives.

 

 

 

5

SOCIAL COMMITMENT

Park’s associates make up the fabric of our organization and are critical to ensuring the success of our Company. As our most valuable corporate asset(s), it is imperative that we provide a safe, supportive and inclusive working environment for all our associates. Through the work of our Human Resources department and our Diversity and Inclusion Steering Committee, we have developed and implemented programs that support this type of environment. Furthermore, Park places high importance on cultivating a strong and positive relationship with the local communities where we work and own properties. We seek to engage with the community through volunteering as well as in-kind and cash donations as identified by the Park Cares Committee.

Spotlight on Associate Diversity, Equity and Inclusion   We continue to prioritize the advancement of diversity, equity and inclusion at Park. We pride ourselves on creating a respectful, professional and inclusive workplace for everyone, and we value the unique perspectives that a workforce with diverse cultures, ages, genders, races and ethnicities brings to our Company.

 

6

 

Spotlight on Associate Surveys & Response

Each year, Park conducts associate engagement surveys to help ensure the alignment of our corporate policies and associates’ priorities. Park’s Human Resources department reports the results from the surveys to all associates, along with a detailed action plan on areas of opportunities that were identified in the survey. In 2021, Park associates reported an overall engagement score of 81%, with a 96% participation rate. From time to time, Park also conducts ad hoc pulse surveys to gauge associates’ sentiments on particular topics of interest. For example, in 2021, we conducted a pulse survey to understand the reaction to Park’s proposed return-to-office procedures. As a result of the feedback received from this associate survey, in early 2022 Park introduced and implemented a hybrid work schedule, whereby most associates have the option to work two days a week from home.

 

7

ENVIRONMENTAL MANAGEMENT & PERFORMANCE

Park aims to minimize its environmental footprint through all phases of the Company’s business, from acquisition to disposition. Minimizing our footprint requires a strong environmental management framework, which we achieve by:

 

•   utilizing environmental benchmarking and reporting •   investing in efficiency projects •   maintaining a proactive resiliency plan to mitigate losses •   standardizing portfolio sustainability efforts; and •   implementing individual property level initiatives.   Park’s environmental management efforts are originated and shaped by our Green Park Committee, which was formalized in 2020 and consists of a cross-departmental team of associates and senior leaders as well as external energy consultants.   One critical initiative of the Green Park Committee has been the creation and implementation of the Green Park Sustainability Playbook (the “Playbook”). The Playbook serves as a detailed “how-to” sustainability guide for Park’s properties and is implemented across our portfolio by Park’s engineering department in partnership with our brand and operating partners. The Playbook helps to gain alignment among and foster collaboration between Park’s property stakeholders.   The Green Park Committee hosts quarterly webinars on topics included in the Playbook, as well as information on relevant and timely sustainability issues. These webinars are directed toward property-level General Managers and Directors of Engineering, providing the Green Park Committee the opportunity to have direct engagement with our brand and operating partners tasked with implementing sustainability at our hotels.

The Green Park Committee also oversees a centralized infrastructure for the collection of data and the standardization of reporting of our environmental, emissions and efficiency data and projects at both the property and portfolio level. This data collection is critical in allowing Park to assess, benchmark and prioritize our ESG and sustainability practices – which efforts we are currently undertaking in a thorough and thoughtful manner. As a result of this thoughtful approach, Park is working towards publicly disclosing measurable, meaningful and strategic environmental and emission reduction targets.

 

 

 

8

PROXY STATEMENT SUMMARY		This summary highlights information contained elsewhere in this Proxy Statement, which is first being distributed or made available on or about March 16, 2022. This summary does not contain all the information you should consider, so please review the Company’s 2021 Annual Report and this entire Proxy Statement before voting.

 

ANNUAL MEETING OF STOCKHOLDERS
Date and Time		Record Date
April 27, 2022 at 11:30 a.m. (Eastern Time)		March 4, 2022
Location		Number of Shares of Common Stock Outstanding and Eligible to Vote at the Meeting as of the Record Date
1775 Tysons Blvd., Tysons, Virginia 22102		236,216,851 shares of common stock

PROXY VOTING ROADMAP

The following table summarizes the items that will be brought to a vote of our stockholders at the 2022 annual meeting of stockholders, along with voting recommendations of our Board of Directors (the “Board”).

 

Proposal 1		Election of Directors   Ø   The Board, acting upon the recommendation of the Governance Committee, has nominated nine of the directors currently serving on the Company’s Board for re-election.   Ø   Through their experience, skills and perspectives, which span various industries and organizations, these director nominees represent a Board that is diverse and possesses the appropriate collective qualifications, skills, knowledge and attributes to provide effective oversight of the Company’s business and quality advice and counsel to the Company’s management.		The Board recommends a vote FOR each director nominee     See page 15
Proposal 2		Advisory Vote on Executive Compensation (Say-on-Pay Vote)   Ø   We believe our compensation program provides the appropriate mix of fixed and at-risk compensation.   Ø   Both the executive short- and long-term incentive programs reward achievement of financial and operational goals, relative TSR and encourage individual performance that is in line with our long-term strategy, is aligned with stockholder interests and remains competitive with our industry peers.		The Board recommends a vote FOR     See page 40
Proposal 3		Ratification of the Appointment of Ernst & Young LLP   Ø   The Audit Committee has appointed Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2022.   Ø   This appointment is being submitted to stockholders for ratification.		The Board recommends a vote FOR     See page 71
Proposal 4		Stockholder Proposal Regarding Equity Retention by Named Executive Officers		The Board recommends a vote AGAINST     See page 74

 

9

DIRECTOR NOMINEE HIGHLIGHTS

Director Nominees and Committees

 

						Committee Memberships
Name		Independent		Director Since		AC		CC		GC		Other Public   Company Boards
Thomas J. Baltimore, Jr. (Chairman)		--		2016								2
Patricia M. Bedient		✓		2017								2
Thomas D. Eckert		✓		2019								1
Geoffrey M. Garrett		✓		2017								--
Christie B. Kelly		✓		2016								1
Sen. Joseph I. Lieberman		✓		2017								1
Thomas A. Natelli		✓		2019								--
Timothy J. Naughton		✓		2017								1
Stephen I. Sadove		✓		2017								3

 

AC		Audit Committee		CC		Compensation & Human Capital Committee
GC		Nominating, Governance & Corporate Responsibility Committee				Chair of the Committee

Snapshot of Director Nominees

Our director nominees each exhibit an effective mix of skills, experience, diversity and judgement.

 

*Information in charts above calculated as of March 16, 2022.

 

 

 

10

CORPORATE GOVERNANCE

Park has a history of strong corporate governance. The Company is committed to sound governance practices designed to promote the long-term interests of stockholders and strengthen Board and management accountability. Our Board regularly evaluates our governance profile against best practices to identify areas for improvement. The Board also leverages our stockholder engagement to gather insights on key areas of stockholder interest and emerging trends to evaluate. Key elements of our corporate governance policies and practices include:

 

 

 

 

 

11

 

 

12

STOCKHOLDER ENGAGEMENT

Each year, our goal is to improve our ongoing, proactive outreach effort with our stockholders. Throughout the year, our investor relations team regularly communicates with investors, prospective investors and investment analysts. Meetings include in-person, telephone and video conferences. These meetings often include participation by our Chief Executive Officer, Chief Financial Officer and other members of our Executive Committee, and they are generally focused on the Company performance, strategy and plans for future growth. Once investor feedback is collected, we share such feedback with our Board as part of our annual corporate governance cycle. For additional information about our corporate governance cycle, see the discussion under the caption “Corporate Governance Matters—Annual Stockholder Engagement Cycle.”

Outreach in Response to the Result of 2021 Say-On-Pay Vote

Additionally, every year, Park provides stockholders with the opportunity for an annual vote to approve its executive compensation program on an advisory basis. At the 2021 annual meeting of stockholders, the advisory vote to approve our executive compensation program received significantly lower stockholder support than in previous years (as we received at least 95% stockholder support from 2017 through 2020). In order to better understand the decline in stockholder support and our stockholders’ views regarding our executive compensation program, the Compensation & Human Capital Committee (the “Compensation Committee”), led by its Chair, Mr. Sadove, undertook an extensive stockholder outreach and engagement initiative in fall/winter 2021 and continuing into early 2022 as summarized below:

 

 

 

Topics		Participants						Response to Stockholder Feedback
Key areas of discussion included:   •  Executive Compensation Framework   •  2020 Special Awards   •  Pay/Performance Alignment   •  Adjustments to 2020 STIP Corporate Performance Objective Metrics in Response to COVID-19 Pandemic   •  Adopted STIP Corporate Performance Objective Metrics for 2021   •  Company’s Response to the COVID-19 Pandemic   •  Inclusion and Diversity Initiatives   •  ESG Programs and Oversight		Outreach was conducted by a cross-functional team including our:   •  Chair of the Compensation Committee – led all meetings   •  SVP & General Counsel   •  SVP, Corporate Strategy and Investor Relations   •  EVP, Design and Construction   •  VP & Assistant General Counsel – Corporate   Stockholder feedback was communicated to our Board.				We received valuable feedback from our stockholders during this outreach. In response to such feedback, the Compensation Committee and the Board have taken certain actions, including:   •  NO SPECIAL AWARDS. The Compensation Committee confirmed that there is no intention to grant special or one-time awards to its executive officers (outside of new hires and promotions)
						•  PAY FOR PERFORMANCE. For fiscal year 2022, the Compensation Committee has increased the performance-based portion for executive’s target annual equity award: -  from 60% to 65% for our Chief Executive Officer -  from 50% to 60% for our other named executive officers
						•  RETURN TO NORMAL FRAMEWORK/ RIGOR OF TARGETS. The Compensation Committee confirmed a return to Park’s normal executive compensation framework for fiscal year 2021 and expected for 2022, with enhanced disclosure outlining the rigor of the STIP corporate objectives and new limitations on the payout of PSUs in the event of negative TSR during the applicable performance period
						•  ESG, HUMAN CAPITAL AND CYBERSECURITY OVERSIGHT. The Board expanded the Governance Committee’s oversight of ESG matters; the Compensation Committee’s oversight of Human Capital matters; and the Audit Committee’s oversight of cybersecurity matters
For additional information about the feedback we heard from stockholders and the actions we took in response, see the discussion under the caption “2021 Say-on-Pay” on page 43 of this Proxy Statement.

 

13

EXECUTIVE COMPENSATION HIGHLIGHTS

 

Based on an effective program design and best practices, our executive compensation is structured to align with the Company’s performance. For example, in fiscal year 2021, 87.5% of our Chief Executive Officer’s target annual total direct compensation was variable and “at-risk” based on the performance of the Company. Furthermore, as a result of our extensive stockholder outreach program and to establish an even greater emphasis on pay for performance, the Compensation Committee has increased the performance-based portion of the target annual equity award from 60% to 65% for our Chief Executive Officer and from 50% to 60% for our other named executive officers for fiscal year 2022.

In addition to pay for performance alignment, Park is firmly committed to a number of other compensation best practices that we believe help to ensure our executive compensation program remains aligned with stockholder interests.

 

What We Do				What We Don’t Do
✓    Maintain a short-term incentive program that is performance oriented and is based on rigorous and measurable Company performance metrics and individual performance objectives				×   No guaranteed minimum short-term incentive or long-term incentive payouts or annual salary increases
✓    Use total stockholder return (“TSR”) as the sole performance metric for our performance stock units that are tied to multi-year performance				×   No tax gross-ups upon a change in control
✓    Maintain meaningful executive and independent director stock ownership policy • 6x for our Chief Executive Officer • 3x for other executive officers • 5x annual cash retainer for directors				×   No employment agreements with executives (other than our Chief Executive Officer, whose employment agreement was required in order to bring him to our Company from another chief executive officer position)
✓    Engage an independent compensation consultant				×   No pledging or hedging activities permitted by our executives and directors
✓    Conduct an annual peer group review to ensure total compensation is properly benchmarked				×   No plan design features that encourage excessive or imprudent risk taking
✓    Offer limited perquisites				×   No dividends on unearned performance stock units
✓    Maintain an incentive compensation clawback policy, allowing the Company to recover annual and/or long-term incentive compensation in certain situations

 

14

PROPOSAL 1 ELECTION OF DIRECTORS

INTRODUCTION

Upon the recommendation of the Governance Committee, the Board has nominated the nine persons identified on the following pages for election at the 2022 annual meeting of stockholders. If elected, each nominee will hold office as a director from election until the next annual meeting of stockholders and until their successor has been duly elected and qualified or until their death, resignation or removal. All of the nominees are currently Park directors who were elected by stockholders at the 2021 annual meeting of stockholders.

Mr. Bethune has notified Park that he will not stand for re-election to the Board at the 2022 annual meeting of stockholders. Mr. Bethune will continue to serve as a member of the Board until his current term as a director expires at the commencement of the 2022 annual meeting. As a result of this development, pursuant to our bylaws, the Board has reduced the size of the Board to nine members, such reduction to be effective upon the effectiveness of Mr. Bethune’s resignation at the commencement of the 2022 annual meeting of stockholders. We sincerely thank Mr. Bethune for his many years of exemplary service on the Board, including serving as our Lead Independent Director since 2017.

Each of our nominees has agreed to be named in this Proxy Statement and to serve if elected. The Board anticipates that the nominees will serve, if elected, as directors. However, if any person nominated by the Board ceases to be a candidate for election by the time of the 2022 annual meeting of stockholders, the proxies will be voted for the election of such other person as the Board may recommend.

VOTE REQUIRED

Under our by-laws, in an uncontested election, directors must be elected by a majority of all the votes cast. This means that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. There is no cumulative voting. Abstentions and broker non-votes (if any) are not counted as votes cast.

In addition, under our by-laws and Corporate Governance Guidelines, if a director nominee who is already serving as a director does not receive a majority of the votes cast, the director must tender his or her resignation to our Board and our Governance Committee, or such other committee designated by the Board, may consider any relevant factors and make a recommendation to the Board on whether to accept or reject the recommendation or take other action. The Board is required to take action with respect to this recommendation within 90 days following certification of the election results.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED BELOW.

 

15

DIRECTOR NOMINEES

Our Governance Committee and our Board have determined that the director nominees possess a diverse and balanced mix of attributes, viewpoints and experiences to effectively oversee Park’s long-term business strategy.

 

 

Biographical information about each director nominee, as well as highlights of certain notable qualifications, experience, skills and attributes that contributed to the director nominee’s selection for election at our 2022 annual meeting of stockholders, are included on the following pages.

 

Thomas J. Baltimore, Jr. Chairman of the Board, President and Chief Executive Officer of Park Hotels & Resorts Inc.
Director since: 2016   Age: 58   Other Current Public Company Boards:   ➣ American Express Company ➣ Prudential Financial, Inc.		Professional Experience   Mr. Baltimore joined the Company in May 2016 and has served as our President and Chief Executive Officer and as a director and the Chairman of the Board since December 2016. Prior to joining the Company, Mr. Baltimore served most recently as the President and Chief Executive Officer of RLJ Lodging Trust (NYSE: RLJ) (“RLJ”), a lodging REIT, and as a member of its board of trustees from RLJ’s formation on January 31, 2011 until May 11, 2016. Prior to that, Mr. Baltimore co-founded RLJ Development and served as its president from 2000 to 2011. During this time period, RLJ Development and affiliates raised and invested more than $2.2 billion in equity. Previously, Mr. Baltimore served as vice president of gaming acquisitions of Hilton Hotels Corporation from 1997 until 1998 and later as vice president of development and finance from 1999 until 2000. He also served in various management positions with Marriott Corporation and Host Marriott Services Corporation, including vice president of business development. Mr. Baltimore currently serves on the board of directors of Prudential Financial, Inc. (NYSE: PRU) and the board of directors of American Express Company (NYSE: AXP). Previously, Mr. Baltimore served on the board of directors of AutoNation, Inc. (NYSE: AN) until January 2021, the board of directors of Duke Realty Corporation (NYSE: DRE) until April 2017, the board of trustees of RLJ until May 2016 and the board of directors of Integra Life Sciences Company (NASDAQ: IART) until August 2012. Mr. Baltimore is also one of the Co-Chairs of the National Association of Real Estate Investment Trusts’ (“Nareit”) Dividends Through Diversity, Equity & Inclusion CEO Council. Mr. Baltimore received his Bachelor of Science degree from the McIntire School of Commerce, University of Virginia and his Master of Business Administration degree from the Colgate Darden School of Business, University of Virginia.   Key Qualifications and Experience   Mr. Baltimore’s knowledge of and extensive experience in various senior leadership roles in the lodging real estate industry provides the Board valuable industry-specific knowledge and expertise. In addition, Mr. Baltimore’s role as our President and Chief Executive Officer brings management perspective to Board deliberations and provides beneficial information about the status of our day-to-day operations.

 

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Patricia M. Bedient Former Executive Vice President and Chief Financial Officer Weyerhaeuser Company
INDEPENDENT   Director since: 2017   Committees: Audit; Governance   Age: 68   Other Current Public Company Boards:   ➣ Alaska Air Group, Inc. ➣ Suncor Energy Inc.		Professional Experience   Ms. Bedient has served as a director on the Board since January 2017. Ms. Bedient most recently served as Executive Vice President for Weyerhaeuser Company (NYSE: WY), one of the world’s largest integrated forest products companies, from 2007 until her retirement in July 2016. Ms. Bedient also served Weyerhaeuser as Chief Financial Officer from 2007 until February 2016. Prior to that, Ms. Bedient served as Senior Vice President, Finance and Strategic Planning of Weyerhaeuser from 2006 until 2007 and as Vice President, Strategic Planning from 2003, when Ms. Bedient joined Weyerhaeuser, until 2006. A certified public accountant (“CPA”) since 1978, Ms. Bedient served as managing partner of the Seattle office of Arthur Andersen LLP prior to joining Weyerhaeuser. Ms. Bedient also worked at Arthur Andersen’s Portland and Boise offices as a partner and as a CPA during her 27-year career with that firm. Ms. Bedient currently serves on the board of directors of Alaska Air Group, Inc. (NYSE: ALK), where she serves as the Lead Independent Director and Chair of the Governance and Nominating Committee, and Suncor Energy Inc. (NYSE: SU), where she serves as the Chair of the Audit Committee. Ms. Bedient received her Bachelor of Science degree in Business Administration with concentrations in Finance and Accounting from Oregon State University. She is a member of the American Institute of CPAs.   Key Qualifications and Experience   Ms. Bedient brings to the Board her extensive financial and management experience, including service as a REIT chief financial officer. In addition, Ms. Bedient brings to the Board her public company directorship experience.

 

Thomas D. Eckert Former Chairman of the Board, Chief Executive Officer and President of Capital Automotive Real Estate Services, Inc.
INDEPENDENT   Director since: 2019   Committees: Audit; Compensation   Age: 74   Other Current Public Company Boards:   ➣ NVR, Inc.		Professional Experience   Mr. Eckert has served as a director on the Board since September 2019. Mr. Eckert previously served at Capital Automotive Real Estate Services, Inc., a privately owned real estate company that owns and manages net-leased real estate for automotive retailers, as President and Chief Executive Officer from 2005 until 2011 and as Chairman of the board of directors from 2011 until 2014. Prior to that, Mr. Eckert served as President, Chief Executive Officer and a trustee of Capital Automotive REIT (Nasdaq: CARS) from its founding in 1997 until it was taken private in 2005. Prior to his tenure at Capital Automotive, Mr. Eckert served at Pulte Home Corporation, a U.S. homebuilder company, from 1983 until 1997. Prior to working at Pulte, Mr. Eckert spent over seven years with the public accounting firm of Arthur Andersen LLP. Mr. Eckert currently serves on the board of directors of NVR, Inc. (NYSE: NVR), where he serves as the Chairman of the Compensation Committee. In addition, Mr. Eckert formerly served on the board of trustees of Chesapeake Lodging Trust (“Chesapeake”) (NYSE: CHSP) from 2010 until Park’s acquisition of Chesapeake in 2019; on the board of directors of Dupont-Fabros Technologies, Inc. (NYSE: DFT) from 2007 until 2017; as the Chairman on the board of directors of The Munder Funds, a $10 billion mutual fund group, from 2006 until 2014; on the board of trustees of The Victory Funds, a $20 billion mutual fund group, from 2014 until 2015; and on the board of trustees of Gramercy Property Trust from 2015 until 2018. Additionally, Mr. Eckert is currently an Emeritus Trustee of The College Foundation at the University of Virginia. Mr. Eckert received a Bachelor degree in Business Administration from the University of Michigan.   Key Qualifications and Experience   Mr. Eckert brings to the Board his extensive financial and leadership experience, including service as a chief executive officer of a publicly-traded REIT. In addition, Mr. Eckert brings to the Board his public company directorship experience.

 

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Geoffrey M. Garrett Dean of Marshall School of Business of the University of Southern California
INDEPENDENT   Director since: 2017   Committee: Audit   Age: 63   Other Current Public Company Boards: None		Professional Experience   Mr. Garrett has served as a director of the Board since June 2017. Mr. Garrett currently serves as dean of the University of Southern California’s Marshall School of Business (“Marshall”). Prior to his appointment as dean of Marshall in July 2020, Mr. Garrett served as the dean of the Wharton School of Business at the University of Pennsylvania from 2014 to 2020, the dean of the business school at University of New South Wales in Australia from January 2013 until June 2014 and the dean of the business school at the University of Sydney, Australia from January 2013 until December 2013. From 2008 until 2012, Mr. Garrett served as the Founding Chief Executive Officer and a Professor of Political Science at the United States Studies Centre in Sydney, Australia. Prior to that, Mr. Garrett served as President of the Pacific Council of International Policy in Los Angeles from 2005 until 2009 and the dean of the UCLA International Institute from 2001 until 2005. Mr. Garrett previously served as a professor at Oxford University, Stanford University, Yale University and as a member of the faculty in the Management Department at Wharton. Mr. Garrett received a Bachelor of Arts degree with Honors from the Australian National University and a Master of Arts and Doctor of Philosophy degrees from Duke University where he was a Fulbright Scholar.   Key Qualifications and Experience   Mr. Garrett brings to the Board his extensive leadership and management experience, as well as a diverse perspective gained from serving as the dean of one of the most prominent business schools in the United States.

 

Christie B. Kelly Executive Vice President, Chief Financial Officer and Treasurer of Realty Income Corporation
INDEPENDENT   Director since: 2016   Committees: Audit (Chair); Compensation   Age: 60   Other Current Public Company Boards:   ➣ Kite Realty Group Trust		Professional Experience   Ms. Kelly has served as a director on the Board since December 2016. Ms. Kelly currently serves as the Executive Vice President, Chief Financial Officer and Treasurer of Realty Income Corporation (NYSE: O), a REIT focused on investing in free-standing, single-tenant commercial properties that are subject to triple-net leases. Prior to her appointment as Chief Financial Officer of Realty Income in January 2021, Ms. Kelly served as Executive Vice President and Chief Financial Officer of Jones Lang LaSalle Incorporated (NYSE: JLL) (“JLL”), a publicly traded financial and professional services firm specializing in real estate, from July 2013 until September 2018. Prior to her tenure at JLL, Ms. Kelly served as Executive Vice President and Chief Financial Officer of Duke Realty Corporation (NYSE: DRE) (“Duke”) from 2009 until June 2013. From 2007 until she joined Duke in 2009, Ms. Kelly served as Senior Vice President, Global Real Estate at Lehman Brothers, where she led real estate equity syndication in the United States and Canada. Prior to that, Ms. Kelly served at General Electric Company (NYSE: GE) from 1983 to 2007 in numerous finance and operational financial management positions in the United States, Europe and Asia that included responsibility for mergers and acquisitions, process improvements, internal audit and enterprise risk management. Ms. Kelly currently serves on the board of directors of Kite Realty Group Trust (NYSE: KRG) and Gilbane, Inc., a private global development company. Ms. Kelly served on the board of directors of Realty Income Corporation from November 2019 until January 2021. Ms. Kelly received her Bachelor of Arts degree in Economics from Bucknell University. She has been recognized as one of the Women of Influence by the Indianapolis Business Journal.   Key Qualifications and Experience   Ms. Kelly brings to the Board financial and industry-specific expertise, including as chief financial officer of a REIT, as well as her public company directorship experience.

 

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Sen. Joseph I. Lieberman Former U.S. Senator of the State of Connecticut and Current Senior Counsel at Kasowitz, Benson & Torres LLP
INDEPENDENT   Director since: 2017   Committees: Audit; Governance   Age: 80   Other Current Public Company Boards:   ➣ L&F Acquisition Corp.		Professional Experience   Sen. Lieberman has served as a director on the Board since January 2017. Sen. Lieberman has been Senior Counsel at Kasowitz, Benson & Torres LLP, a national law firm focusing on complex commercial litigation, since 2013. Prior to joining Kasowitz, Sen. Lieberman, the Democratic nominee for Vice President of the United States in the 2000 presidential election, served 24 years in the U.S. Senate, retiring in January 2013 following the end of his fourth term. During his tenure in the U.S. Senate, Sen. Lieberman helped shape legislation in areas of public policy, including national and homeland security, foreign policy, fiscal policy, environmental protection, human rights, health care, trade, energy, cyber security and taxes. Sen. Lieberman served the U.S. Senate in many leadership roles, including as the Chairman of the Committee on Homeland Security and Government Affairs. Prior to being elected to the U.S. Senate, Sen. Lieberman served as the Attorney General of the State of Connecticut from 1983 until 1988. From 1970 until 1980, Sen. Lieberman also served in the Connecticut State Senate, including three terms as majority leader. Sen. Lieberman currently serves on the board of directors of L&F Acquisition Corp. (NYSE: LNFA.U.), where he serves as the Chair of the Compensation Committee. Sen. Lieberman received his Bachelor of Arts degree in Political Science and Economics and his Juris Doctorate degree from Yale University.   Key Qualifications and Experience   Sen. Lieberman brings to the Board extensive public policy and government relations experience, including as U.S. Senator of the State of Connecticut, and legal experience in his current role as Senior Counsel.

 

Thomas A. Natelli President and Chief Executive Officer of Natelli Communities
INDEPENDENT   Director since: 2019   Committees: Audit; Governance   Age: 61   Other Current Public Company Boards: None		Professional Experience   Mr. Natelli has served as a director on the Board since September 2019. Mr. Natelli has served as President and Chief Executive Officer of Natelli Communities, a privately held real estate investment and development company, since 1987. Additionally, Mr. Natelli has served as Principal of MargRock Entertainment, a music publishing and artist development and management services company, since 2007. In July 2021, Mr. Natelli joined the Board of Quantum Loophole, Inc., a privately held developer of data center campuses. Mr. Natelli is the immediate past chairman and has served on the board of the School of Engineering at Duke University since 2006. He has served on the President’s Council of Catholic Charities of Washington DC since 2014. Previously, Mr. Natelli served on the board of directors of Chesapeake Lodging Trust (NYSE: CHSP) from 2010 until Park’s acquisition of Chesapeake in 2019; on the board of directors of Highland Hospitality Corporation (NYSE: HIH) from 2003 until 2007; on the board of trustees of Suburban Hospital Healthcare System from 1993 until 2006; and on the board of directors of FBR National Bank and Trust, a wholly-owned affiliate of Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) from 2001 until 2005. Mr. Natelli served as President of the Board of the Montgomery County Chamber of Commerce in 1993, and played a central role in creating the Montgomery Housing Partnership in 1989, a non-profit organization created to preserve and expand the supply of affordable housing in Montgomery County, Maryland. Mr. Natelli received his Bachelor of Science degree in Mechanical Engineering from Duke University in 1982.   Key Qualifications and Experience   Mr. Natelli brings to the Board industry-specific experience in the real estate sector, as well as his public company directorship experience.

 

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Timothy J. Naughton Executive Chairman of the Board and Former Chief Executive Officer of AvalonBay
INDEPENDENT   Director since: 2017   Committees: Governance (Chair); Compensation   Age: 60   Other Current Public Company Boards:   ➣ AvalonBay Communities, Inc.		Professional Experience   Mr. Naughton has served as a director on the Board since January 2017. Mr. Naughton currently serves as the Executive Chairman of the Board of Directors of AvalonBay Communities, Inc. (NYSE: AVB) (“AvalonBay”), a REIT focused on multifamily communities. Joining AvalonBay’s predecessor entity in 1989, Mr. Naughton served as Chairman of the board of directors for AvalonBay from May 2013 until January 2022, as Chief Executive Officer from January 2012 until January 2022, as President from February 2005 until February 2021, as Chief Operating Officer from 2001 until 2005, as Senior Vice President, Chief Investment Officer from 2000 until 2001 and as Senior Vice President and Vice President, Development and Acquisitions from 1993 until 2000. Mr. Naughton served on the board of directors of Welltower Inc. (NYSE: WELL) from 2013 until 2019, previously served on the executive board of Nareit, is a member of The Real Estate Round Table, is a member and past Chairman of the Multifamily Council of the Urban Land Institute and is a member of the Real Estate Forum. Mr. Naughton received his Master of Business Administration from Harvard Business School and received his Bachelor of Arts degree in Economics with High Distinction from the University of Virginia, where he was elected to Phi Beta Kappa.   Key Qualifications and Experience   Mr. Naughton brings to the Board industry-specific experience in the real estate sector, including as chief executive officer of a REIT, as well as his extensive public company directorship experience.

 

Stephen I. Sadove Founding Partner of JW Levin Management Partners LLC and Former Chairman of the Board and Chief Executive Officer of Saks Inc.
INDEPENDENT   Director since: 2017   Committees: Compensation (Chair); Governance   Age: 70   Other Current Public Company Boards:   ➣ Colgate-Palmolive Company ➣ Aramark ➣ Movado Group, Inc.		Professional Experience   Mr. Sadove has served as a director on the Board since January 2017. Mr. Sadove has served as a founding partner of JW Levin Management Partners LLC, a private management and investment firm, since 2015. Mr. Sadove has also served as principal of Stephen Sadove and Associates, which provides consulting services to the retail industry, since 2014. From 2007 until 2013, Mr. Sadove served as Chairman and Chief Executive Officer of Saks Incorporated (“Saks”), an owner and operator of high-end department stores in the United States. Prior to that, Mr. Sadove served Saks as Vice Chairman from January 2002 until March 2004, as Chief Operating Officer from March 2004 until January 2006 and was named Chief Executive Officer in 2006. Prior to his tenure with Saks, Mr. Sadove served Bristol-Myers Squibb Company (NYSE: BMY) from 1991 until 2001, as President, Clairol from 1991 until 1996, as President, Worldwide Beauty Care from 1996 until 1997, as President, Worldwide Beauty Care and Nutritionals from 1997 until 1998 and as Senior Vice President of Bristol-Myers Squibb and President, Worldwide Beauty Care from 1997 until 2001. Mr. Sadove currently serves on the board of directors of Colgate-Palmolive Company (NYSE: CL), where he serves as the Lead Director, Aramark (NYSE: ARMK), where he is also Non-Executive Chairman of the Board, Movado Group, Inc. (NYSE: MOV) and Waterloo Sparkling Water, a privately-held sparkling water producer, where he serves as Non-Executive Chairman of the Board. Mr. Sadove served on the board of directors of J.C. Penney Company, Inc. (NYSE: JCP) until May 2016 and Ruby Tuesday, Inc. (NYSE: RT) until December 2017. Mr. Sadove received his Master of Business Administration degree with Distinction from Harvard Business School and received his Bachelor’s degree in Government from Hamilton College. He currently is a life trustees of Hamilton College.   Key Qualifications and Experience   Mr. Sadove brings to the Board extensive operations and management experience, including as chief executive officer of a large, national retailer, as well as his extensive public company directorship experience.

 

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SUMMARY OF DIRECTOR NOMINEES’ SKILLS AND EXPERIENCE

 

Baltimore, Thomas J., Jr.

Bedient, Patricia M.

Eckert, Thomas D.

Garrett, Geoffrey M.

Kelly, Christie B.

Lieberman, Sen. Joseph I.

Natelli, Thomas A.

Naughton, Timothy J.

Sadove, Stephen I.

ACCOUNTING / FINANCIAL EXPERTISE enables an in-depth understanding of our financial reporting and internal controls, ensuring transparency and accuracy

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ACCOUNTING / FINANCIAL LITERACY enables a general understanding of our financial reporting and internal controls, ensuring transparency and accuracy

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BOARD OF DIRECTORS experience in serving on public sector, private sector or non-profit boards

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BUSINESS OPERATIONS experience provides directors with a practical understanding of developing, implementing and evaluating our operating plans and strategies

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EXECUTIVE experience in leadership role as a company executive officer or head of a government or academic organization

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FINANCIAL/CAPITAL MARKETS experience in raising the capital needed to fund a business

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LODGING knowledge of the lodging industry and the issues facing hotels, brands and owners

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MANAGEMENT experience provides directors a practical undertsanding of developing, implementing and assessing our operating plan and business strategy

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REAL ESTATE experience is important to understanding the business and strategy of a real estate company

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REITS prior knowledge of the issues facing real estate investment trusts including taxation and public markets

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RETAIL experience is important in understanding hospitality as a retail platform and also the retail that exists in many hotels within the Company’s portfolio

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RISK MANAGEMENT experience is critical to the Board’s role in overseeing the risks facing the Company

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TECHNOLOGY / CYBER SYSTEMS relevant to the Company as it looks to enhance internal operations and assess cyber issues

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CORPORATE

GOVERNANCE MATTERS

 

 

INTRODUCTION

Our Board is responsible for providing governance and oversight over the strategy, operations and management of Park. The primary mission of the Board is to represent and protect the interests of our stockholders and other stakeholders. The Board oversees our senior management, to whom it has delegated the authority to manage the day-to-day operations of the Company. We believe good governance strengthens the Board and management’s accountability. The following sections provide an overview of our corporate governance structure, including corporate governance highlights, stockholder outreach cycle, director independence, Board leadership structure and the responsibilities of the Board and each of its committees.

 

Annual election of directors		All of our directors are elected annually.
Majority voting/director resignation policy		Each director nominee must be elected by a majority of votes cast in uncontested elections. This majority voting standard complements our policy that requires any director nominee in an uncontested election who fails to receive a majority of the votes cast to promptly tender his or her resignation to the Board for the Board’s consideration.
Independent Board		All of our directors are independent except for our Chief Executive Officer.
100% independent Board committees		Each of our three Board committees consists solely of independent directors. Each standing committee operates under a written charter, that has been approved by the Board and which is reviewed annually.
Strong Lead Independent Director, elected by the independent directors		We have a Lead Independent Director of the Board who has comprehensive duties, including leading regular executive sessions of the Board.
Annual Board and committee evaluation process		The Governance Committee conducts an anonymous survey of the Board and its committees each year.
“Opted out” of certain Delaware anti-takeover protections		We have expressly elected that the Company not be governed by the anti-takeover protections provided by Section 203 of the Delaware General Corporation Law.
Director selection process		Our Board has a rigorous director selection process resulting in a diverse Board in terms of gender, experience, perspectives, skills and tenure. Additionally, our Board has approved a Policy Regarding Diversity as a Consideration for Board Nominations demonstrating its commitment to actively seeking out diverse candidates.
Authority to call special meetings		Stockholders holding 25% or more of our outstanding share capital have the right to convene a special meeting.
No stockholder rights plan (“Poison Pill”)		The Company does not have a poison pill.
Proxy access right		Eligible stockholders can (subject to certain requirements) include their own qualified director nominees in our proxy materials.
Active stockholder engagement		We regularly engage with our stockholders, with such engagement often including independent directors, to better understand their perspectives and provide received feedback to the Board.
Authority to amend by-laws		Stockholders consisting of at least a majority of the outstanding share capital are entitled to amend the Company’s by-laws.
Clawback policy		We maintain a clawback policy applicable to our senior leaders, which provides for the recoupment of annual and/or long-term incentive compensation under specified circumstances as further described under “Compensation Discussion and Analysis—Other Compensation Program Elements.”
Director and executive officer equity ownership requirements		Each Park officer is required to hold Park equity with a value equal to six times his compensation for our Chief Executive Officer and three times his/her compensation for Executive Committee members by the fifth anniversary of becoming subject to such policy. Each director is required to hold Park equity having a fair market value equal to five times the value of his or her annual cash retainer within five years of joining the Board.
Prohibition on hedging or pledging of company stock		Our directors and executive officers are prohibited from entering into hedging and pledging transactions.

 

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ANNUAL STOCKHOLDER ENGAGEMENT CYCLE

Each year, our goal is to improve our ongoing, proactive outreach effort with our stockholders. Throughout the year, our investor relations team regularly communicates with investors, prospective investors and investment analysts. Meetings include in-person, telephone and video conferences. These meetings often include participation by our Chief Executive Officer, Chief Financial Officer and other members of our Executive Committee. Additionally, we engage in meaningful year-round public communications, including our quarterly earnings calls. Furthermore, as reflected in our Corporate Governance Guidelines, our Lead Independent Director is available for consultation and direct communication with stockholders. During 2021 and continuing into 2022, we engaged with stockholders on the following topics:

 

 

The feedback received from our stockholder outreach efforts is communicated to and considered by the Board, and our engagement activities have produced valuable insights that help inform our decisions and our strategy, when appropriate.

 

 

 

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BOARD LEADERSHIP STRUCTURE

Park believes that independent board oversight is an essential component of strong corporate performance. We also believe that the decision as to whether the positions of Chairman and Chief Executive Officer should be combined or separated, and whether an executive or an independent director should serve as the Chairman should be based upon the circumstances facing the company. Maintaining flexibility on this policy allows the Board to choose the leadership structure that will best serve the interests of the Company and its stockholders at any particular time.

 

The Right Structure for Right Now The Board continues to believe that its current leadership structure, which has a combined role of Chairman and Chief Executive Officer, counterbalanced by a strong independent Board led by an experienced and empowered Lead Independent Director and independent directors chairing each of the Board Committees, provides the optimal balance between independent oversight of management and unified leadership. In the Board’s view, this structure allows Mr. Baltimore, as Chairman and Chief Executive Officer, to drive strategy at the Board level, while maintaining responsibility for executing on that strategy as Chief Executive Officer. At the same time, our Lead Independent Director works with Mr. Baltimore to set the agenda for the Board and also exercises additional oversight on behalf of the independent directors. The Board expects to continue to periodically review the appropriateness of this structure and consider feedback from our ongoing stockholder engagements to determine the structure that is in the best interests of the Company and its stockholders.

How We Select the Lead Independent Director

Our Corporate Governance Guidelines requires the independent directors to elect a Lead Independent Director on an annual basis.

 

LEAD INDEPENDENT DIRECTOR’S ROLE
BOARD LEADERSHIP. Provides leadership to the Board in any situation where the Chairman’s role may be perceived to be in conflict		LEADERSHIP OF INDEPENDENT DIRECTOR MEETINGS. Presides at all independent director meetings at which the Chairman is not present, including executive sessions of the independent directors
BOARD AGENDA, SCHEDULE & INFORMATION. Approves the agenda (with the ability to add agenda items), schedule and information sent to directors and calls additional meetings as needed		CHAIRMAN / DIRECTOR LIASON. Regularly meets with the Chairman and serves as liaison between the Chairman and the independent directors (although every director has direct access to the Chairmen)
STOCKHOLDER COMMUNICATIONS. Makes himself/herself available, if requested, by stockholders for consultation and direct communication

Mr. Bethune was elected by the independent directors in April 2021 to serve as Lead Independent Director. In light of Mr. Bethune’s decision not to stand for re-election at the 2022 annual meeting and consistent with the Board’s succession planning process, the independent directors have elected Mr. Sadove to serve as the new Lead Independent Director following the end of Mr. Bethune’s term. As a result of his election as Lead Independent Director, Mr. Sadove will no longer serve as Chair of the Compensation Committee following the completion of his current term as Chair.

 

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DIRECTOR INDEPENDENCE AND INDEPENDENCE DETERMINATIONS

Under our Corporate Governance Guidelines and the New York Stock Exchange (“NYSE”) rules, a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries. In addition, the director must meet the bright-line tests for independence set forth by the NYSE rules.

Our Corporate Governance Guidelines define independence in accordance with the independence definition in the current NYSE corporate governance rules for listed companies. Our Corporate Governance Guidelines require the Board to review the independence of all directors at least annually.

In the event a director has a relationship with the Company that is relevant to his or her independence and is not addressed by the objective tests set forth in the NYSE independence definition, the Board will determine, considering all relevant facts and circumstances, whether that relationship is material.

As a result of its review process, the Board has affirmatively determined that each of Ms. Bedient, Mr. Eckert, Mr. Garrett, Ms. Kelly, Sen. Lieberman, Mr. Natelli, Mr. Naughton and Mr. Sadove is independent under the guidelines for director independence set forth in our Corporate Governance Guidelines and under all applicable NYSE guidelines, including with respect to committee membership. Mr. Bethune, who will not be standing for re-election to the Board following the end of his current term, was also determined to be independent in 2021. The only member of the Board that is not independent is Mr. Baltimore, President and Chief Executive Officer of the Company.

BOARD COMMITTEES

Charters for each of the Board’s three standing committees can be found on the Corporate Governance—Governance Documents page of our website at pkhotelsandresorts.com/investors. All members of the Board’s standing committees are independent directors.

 

		Audit Committee
		MEMBERS   All Independent		Christie B. Kelly,  CHAIR  Patricia M. Bedient Thomas D. Eckert		Geoffrey M. Garret     Sen. Joseph I. Lieberman     Thomas A. Natelli
		ATTENDANCE                    100%				MEETINGS IN 2021     4 Executive Sessions    4		REPORT Page 72
		The Audit Committee’s duties and responsibilities include (without limitation) the following:   ➣  Oversee the Company’s financial reporting, audit process, internal controls and legal, regulatory and ethical compliance ➣  Appoint the Company’s independent registered public accounting firm, approve its services and fees and establish and review the scope and timing of its audits ➣  Review and discuss the Company’s financial statements with management and the independent registered public accounting firm, including critical accounting policies and practices, material alternative financial treatments within GAAP and any disagreements with management and other material written communications between the independent registered public accounting firm and management ➣  Oversee the Company’s compliance with applicable laws and regulations and with the Company’s Code of Conduct ➣  Review and oversee the Company’s data privacy, information technology and security and cybersecurity risk exposures and the guidelines, programs and steps implemented by management to assess, manage and mitigate any such exposures ➣  Discuss the Company’s major enterprise and financial risk exposures and the steps management has taken to monitor and control such exposures   The Board has determined that each of the members of the Audit Committee is independent as defined by our Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors generally and audit committees in particular.   The Board has also determined that each of the members of the Audit Committee is financially literate within the meaning of the NYSE listing standards and that Mmes. Bedient and Kelly and Mr. Eckert qualify as “audit committee financial experts” as defined under applicable SEC rules and regulations.

 

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		Compensation & Human Capital Committee (“Compensation Committee”)
		MEMBERS   All Independent		Stephen I. Sadove,  CHAIR  Gordon M. Bethune Thomas D. Eckert		Christie B. Kelly     Timothy J. Naughton
		ATTENDANCE                     100%				MEETINGS IN 2021     5 Executive Sessions    5		REPORT Page 60
		The Compensation Committee’s duties and responsibilities include (without limitation) the following:   ➣  Oversee, review and approve the goals, objectives, compensation and benefits of our Chief Executive Officer and other executive officers ➣  Evaluate the performance of our Chief Executive Officer and other executive officers at least annually ➣  Review and approve compensation plans and programs, including performance-based compensation, equity-based compensation programs and perquisites ➣  Review and make recommendations to the Board with respect to director compensation ➣  Coordinate succession planning as it relates to the Chief Executive Officer ➣  Review and assess the incentives and the risks arising from the Company’s compensation policies, particularly performance-based compensation, as it relates to risk management practices and/or risk-taking incentives ➣  Review and discuss with management the Compensation Discussion and Analysis in the Company’s proxy statement ➣  Review reports from management related to the Company’s demographics, pay equity, personnel appointments and practices and the Company’s employee engagement and retention, diversity and inclusion and workplace environment, safety and culture initiatives   The Board has determined that each of the members of the Compensation Committee is independent as defined by our Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors generally and compensation committees in particular.   Pursuant to its Charter, and subject to compliance with applicable laws of our state of jurisdiction, the Compensation Committee may not delegate its authority to approve executive compensation or grant equity awards to directors or executive officers of the Company, except to subcommittees comprised solely of Committee members. The Compensation Committee also has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. A more detailed discussion of the Compensation Committee’s use of outside advisors with respect to 2021 compensation matters is provided under the caption “Compensation Discussion and Analysis—Role of Compensation Consultant.”

 

		Nominating, Governance & Corporate Responsibility Committee (“Governance Committee”)
		MEMBERS   All Independent		Timothy J. Naughton,   CHAIR   Patricia M. Bedient  Gordon M. Bethune		Sen. Joseph I. Lieberman       Thomas A. Natelli       Stephen I. Sadove
		ATTENDANCE                      100%				MEETINGS IN 2021    2 Executive Sessions    2
		The Governance Committee’s duties and responsibilities include (without limitation) the following:   ➣  Recommend Board size and membership criteria and identify, evaluate and recommend qualified candidates to serve on the Board ➣  Review and make recommendations regarding Board and committee composition ➣  Oversee the Company’s corporate governance programs, policies and practices ➣  Review and recommend updates to the Corporate Governance Guidelines ➣  Oversee annual evaluation of the Board and its committees ➣  Review all “related party transactions” ➣  Oversee, review and discuss with management the Company’s activities related to corporate responsibility, sustainability and ESG matters   The Board has determined that each of the members of the Governance Committee is independent as defined by our Corporate Governance Guidelines and the NYSE listing standards.

 

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The rotation of committee chairs and members is considered on an annual basis to ensure diversity of Board member experience and variety of perspectives across the committees, but there is no strict committee rotation policy. Changes to committee assignments are made based on committee needs, director interests, experience and availability, and applicable regulatory and legal considerations. Moreover, the value of rotation is weighed carefully against the benefit of committee continuity and experience.

MEETINGS

The Board, in accordance with our Corporate Governance Guidelines, expects that all directors make every effort to attend all meetings of the Board and the committees on which the director serves as well as the annual stockholder meeting. Mr. Baltimore is invited to attend meetings of the Board committees, but he does not have a vote on any committee matter. The Board and the Board committees regularly meet in executive sessions, at which no management representative is present.

In 2021, the Board held six meetings, the Audit Committee held four meetings, the Compensation Committee held five meetings and the Governance Committee held two meetings. In 2021, each of our directors attended at least 75% of the aggregate of: (i) the total number of meetings of the Board and (ii) the total number of meetings held by all committees of the Board on which he or she serves during his or her period of service as a director. Due to the continuing concerns regarding health and safety in connection with the COVID-19 pandemic, only one of our directors was able to attend the 2021 annual meeting of stockholders.

CORPORATE GOVERNANCE GUIDELINES

Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which describe the Board’s views on a wide range of governance topics. Our Corporate Governance Guidelines are reviewed from time to time by the Governance Committee and revised as it considers appropriate, upon recommendation to and approval by the Board. Our Corporate Governance Guidelines can be found on the Corporate Governance—Governance Documents page of our website at pkhotelsandresorts.com/investors.

CODE OF CONDUCT & WHISTLEBLOWER POLICY

The Board has adopted a Code of Conduct, which can be found on the Corporate Governance—Governance Documents page of our website at pkhotelsandresorts.com/investors.

The Code of Conduct applies to all of our directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Controller, and sets forth our policies and expectations on a number of topics, including conflicts of interest, compliance with laws, use of our assets and business conduct and fair dealing. This Code of Conduct also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. Any substantive amendment to, or waivers from, certain provisions of our Code of Conduct for the Company’s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Controller or persons performing similar functions or any director will be posted on the Company’s website, at the address and location specified above.

The Company also maintains a Whistleblower Policy that establishes procedures for the receipt, retention and treatment of complaints received by us regarding questionable accounting or auditing matters or practices that may include or result in any such questionable accounting or auditing matters.

 

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RISK MANAGEMENT OVERSIGHT

 

Board of Directors   The Board has overall responsibility for risk oversight. A fundamental part of this risk oversight is not only understanding the material risks that Park faces and the steps management is taking to manage those risks, but also understanding what level of risk is appropriate for Park.   While the full Board has overall responsibility for risk oversight, it is supported in this function by the Audit Committee, the Compensation Committee and the Governance Committee.

Audit Committee

Compensation & Human Capital Committee

Nominating, Governance & Corporate Responsibility Committee

•  Responsible for reviewing the Company’s accounting reporting and financial practices, including the integrity of its financial statements and the surveillance of administrative and financial controls   •  Responsible for reviewing the Company’s major enterprise and financial risk exposures, including business continuity and operational risks and cybersecurity, and the steps management has taken to monitor and control such exposures   •  Oversees the Company’s risk assessment, risk management and risk mitigation policies and programs, including with respect to enterprise risk management, data privacy and cybersecurity risk exposures   •  Receives and reviews periodic compliance reports from management regarding the Company’s compliance with applicable laws and regulations and with the Company’s Code of Conduct

•  Responsible for reviewing and overseeing the management of any potential material risks related to Park’s compensation structure and compensation programs, including the formulation, administration and regulatory compliance with respect to compensation matters   •  Oversees the development, implementation and effectiveness of the Company’s practices, policies and strategies relating to human capital and talent management and matters relating to the Company’s demographics, pay equity, personnel appointments and practices and the Company’s employee engagement and retention, diversity and inclusion and workplace environment, safety and culture initiatives   •  Oversees Chief Executive Officer succession planning

•  Oversees risks associated with the Company’s corporate governance programs, policies and practices   •  Oversees and reviews the Company’s activities related to corporate social responsibility and sustainability matters, including Park’s overall ESG strategies, policies, practices, goals and programs

In 2022, the Board updated each of its committee’s charters to formalize and/or expand on certain oversight responsibilities for each committee, including enterprise risk management and cybersecurity oversight by the Audit Committee, human capital and talent management oversight by the Compensation Committee and sustainability, corporate responsibility and ESG oversight by the Governance Committee.

 

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BOARD OVERSIGHT OF MANAGEMENT SUCCESSION PLANNING AND TALENT DEVELOPMENT

Our Board and management consider succession planning and leadership development to be an integral part of the Company’s long-term strategy. Our Compensation Committee is required under its charter to oversee the evaluation of the Company’s executive officers, including the nature and frequency of the evaluation process. As well, the Compensation Committee is required to coordinate succession planning as it relates to the Chief Executive Officer.

At least annually, our Board receives an update on the Company’s multi-faceted approach to improving the capabilities of our existing leaders and nurturing our next generation of high-performers. The Company’s development programs include a continuous feedback and review process, a manager development series, lunch & learn sessions and executive mentors. Additionally, the Company selects approximately four or five high-performing leaders from within the organization each year to participate in a formal and intensive Leadership Development Program that lasts for approximately six months. It is the Company’s intention that these various programs will ensure continuity of leadership over the long term and form the basis on which the Company may make ongoing leadership assignments.

BOARD AND COMMITTEE SELF-EVALUATION PROCESS

Our Board and each of its committees have a robust annual self-evaluation process.

 

			1			DETERMINE FORMAT   The Governance Committee oversees the annual self-evaluation process on behalf of the Board, which involves the completion of a written questionnaire by each director. Each year, the Governance Committee reviews and updates the tailored assessment focusing on various topics, including Board and committee composition, processes, dynamic, performance, effectiveness and contributions to the Company.
			2			CONDUCT BOARD AND COMMITTEE EVALUATIONS   Members of the Board and each committee participate in the formal evaluation process by anonymously completing the approved written questionnaire.
			3			REVIEW FEEDBACK IN EXECUTIVE SESSION   The Lead Independent Director receives a memo summarizing and tabulating the results of the questionnaires in order to ensure that responses remain anonymous. The Lead Independent Director leads a discussion in executive session with the full Board to review the results of the self-evaluation and identify follow up items.   The committee self-evaluation process involves a review and discussion for each committee. The process is led by the chair of each committee and is conducted in executive session.
			4			RESPOND TO DIRECTOR INPUT   In response to feedback from the evaluation process, the Board and committees work with management to consider adjustments or enhancements to further Board and committee effectiveness.

As a result of the Board’s self-evaluation processes in recent years, the Board has adopted certain improvements, including adjusting meeting schedules to allow more time at certain committee meetings throughout the year, evaluating Board materials to determine the most efficient and effective way to provide materials to facilitate a robust discussion, adding to the Board’s annual calendar a comprehensive Board meeting dedicated to corporate strategy and reviewing and updating agenda items to be considered at meetings to use the Board’s time most effectively.

 

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BOARD CANDIDATE QUALIFICATION AND SELECTION PROCESS

When evaluating candidates for nomination to the Board, the Governance Committee considers the factors set forth in our Corporate Governance Guidelines, as amended from time to time. Our Corporate Governance Guidelines currently provide as follows:

The Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board, subject to any obligations and procedures governing the nomination of directors to the Board that may be set forth in any agreement or arrangement to which the Company is party. The Governance Committee may consider:

 

a.

relevant experience, skills and knowledge as well as minimum individual qualifications, including strength of character, judgment, industry knowledge or experience and an ability to work collegially with the other members of the Board; and

 

b.

all other factors it considers appropriate, which may include existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations, corporate governance background, financial and accounting background, executive compensation background and the size, composition and combined expertise of the existing Board.

The Board should monitor the mix of skills and experience of its directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively.

The Governance Committee expects to identify potential candidates through referrals and recommendations, including by incumbent directors, management and stockholders, as well as through business and other organizational networks. The Governance Committee may also retain and compensate third parties, including executive search firms, to identify or evaluate, or assist in identifying or evaluating, potential director nominees.

The Governance Committee expects to consider current Board members by balancing the value of the director’s continuity of service and familiarity with the Company with that of obtaining a new perspective. The Governance Committee also expects to consider each individual’s contributions, performance and level of participation, the current composition of the Board, and the Company’s needs. If any existing director does not want to continue in service or if the Governance Committee decides not to re-nominate a director, the Governance Committee will identify and evaluate new candidates based on the qualifications set forth in our Corporate Governance Guidelines. Prior to recommending a new candidate to the Board, the Governance Committee will (i) request that one or more of its members (or other members of the Board) interview the candidate, (ii) conduct an appropriate review of the background of the candidate and (iii) discuss the candidate. Once the Governance Committee selects a slate of Board candidates, it will present and recommend the slate to the full Board. The Governance Committee will evaluate candidates for nomination for election to the Board recommended by stockholders on a substantially similar basis as it considers other nominees.

STOCKHOLDER NOMINATIONS AND RECOMMENDATIONS FOR BOARD NOMINATIONS

The Governance Committee will accept for consideration qualified candidates properly recommended by stockholders. Stockholders who wish to recommend qualified candidates must do so by notifying the Company in writing, by notice delivered to the attention of the Secretary of the Company at the address of the Company’s executive offices as set forth in the Company’s periodic reports, of a recommended director candidate. Submissions may be by mail, overnight courier or personal delivery. E-mail submissions will not be considered. In order to ensure meaningful consideration of candidates, notice must be received not less than 90 calendar days and not more than 120 calendar days prior to the first anniversary of the date of the proxy statement for the prior year’s annual meeting of stockholders. In the event that the annual meeting date is advanced by more than 20 calendar days or delayed by more than 70 calendar days from the anniversary date of the previous year’s meeting, then notice must

 

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be received no earlier than the close of business on the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or, if later, the 10th calendar day following the day on which public announcement of the date of such meeting is first made.

The notice must set forth as to each recommended candidate all information required under our by-laws and any other information relating to the recommended candidate that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, including the recommended candidate’s written consent to being named in the Company’s proxy statement as a nominee and to serving as a director if elected. The Company may require any recommended candidate to furnish such other information as may reasonably be required to determine the eligibility of the nominee to serve as a director, as well as a consent to be interviewed by the Governance Committee.

Submissions received through this process will be forwarded to the Governance Committee for review. Only those nominees whose submissions comply with these procedures and who satisfy the qualifications determined by the Governance Committee for directors of the Company will be considered by the Governance Committee. Acceptance of a recommendation for consideration does not imply the Governance Committee will nominate or recommend for nomination the recommended candidate. Nominees for director who are recommended by stockholders will be evaluated in the same manner as any other nominee for director. In addition, stockholders may nominate directors for election to the board by following the procedures in our by-laws, as described below under “Other Matters—Stockholder Proposals for 2023 Annual Meeting.”

Stockholders who would like to nominate a candidate for director by providing advance notice of the nomination pursuant to our by-laws must comply with the requirements described in this Proxy Statement and the Company’s by-laws.

PROXY ACCESS

In February 2019, our Board adopted amended and restated by-laws which include a proxy access provision to permit a stockholder, or a group of up to 20 stockholders, meeting specified eligibility requirements, to nominate and include director candidates constituting up to the greater of two nominees or 20% of the number of directors then in office in the Company’s proxy materials for any annual meeting of stockholders. In order to be eligible to utilize these proxy access provisions, a stockholder, or group of stockholders, must, among other requirements:

 

•

have owned 3% or more of the Company’s outstanding common stock continuously for at least three years

 

•

represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control at the Company and that such stockholder or group does not presently have such intent; and

 

•

provide a notice requesting the inclusion of director candidates in the Company’s proxy materials and provide other required information to the Company not less than 120 days nor more than 150 days prior to the first anniversary of the date of the Company’s proxy statement for the preceding year’s annual meeting (with adjustments if the date for the upcoming annual meeting of stockholders is advanced or delayed by more than 30 days from the anniversary date of the preceding year’s annual meeting).

Stockholders who would like to nominate a candidate for director via proxy access must comply with the requirements described in this Proxy Statement and the Company’s by-laws.

 

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DIVERSITY POLICY

Pursuant to the Board’s Policy Regarding Diversity as a Consideration for Board Nominations, the Governance Committee and Board consider diversity – in terms of age, experience, industry, gender and ethnicity – to be an important factor in the consideration of candidates for nomination to the Board. However, no new candidates have been nominated for the Board since the adoption of this policy (other than Mr. Garrett, who was originally nominated by a large former stockholder pursuant to a then-existing stockholder agreement, and Messrs. Eckert and Natelli, who were both originally nominated in September 2019 pursuant to and in accordance with the terms of that certain Merger Agreement with Chesapeake Lodging Trust). As a result, the Board has not yet had an opportunity to evaluate the effectiveness of this policy.

POLICY REGARDING STOCKHOLDER RIGHTS PLANS

The Board affirms as a matter of corporate policy that it will not authorize or adopt any stockholder rights plan or similar plan or agreement without the prior approval of the Company’s stockholders, unless any such plan or agreement would be submitted to the Company’s stockholders to be ratified or, in the absence of such stockholder approval or ratification, would expire within one year of its adoption.

COMMUNICATIONS WITH THE BOARD

As described in our Corporate Governance Guidelines, stockholders and other interested parties who wish to communicate with our Lead Independent Director, the chairperson of the Audit, Compensation or Governance Committees, or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the Secretary of the Company, c/o Park Hotels & Resorts Inc., 1775 Tysons Blvd, 7^th Floor, Tysons, Virginia 22102, who will forward all such communication to the appropriate party.

 

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DIRECTOR

COMPENSATION

 

 

COMPENSATION PROGRAM

 

Introduction Our director compensation program is designed to compensate independent, non-employee directors fairly for work required for a company of our size, complexity and scope and to align their interests with the interests of our stockholders. The program reflects our desire to attract, retain and use the expertise of highly-qualified people serving on our Board. In considering and ultimately recommending the compensation for our non-employee directors, the Compensation Committee reviewed and considered peer data and analysis and recommendation from the Compensation Committee’s independent compensation consultant.

Program Details

Our independent directors receive director compensation for the period from the annual meeting at which they are elected until the next annual meeting. For the 2021-2022 period, our annual compensation program for independent directors is summarized in the table below:

 

Item		April 2021 — April 2022
Annual Cash Retainer for Board Members		$80,000
Annual Cash Retainer for Lead Independent Director		$35,000
Annual Cash Retainer for each Audit, Compensation and/or Governance Committee Membership (Other than the Chairperson)		$7,500
Annual Cash Retainer for Audit Committee Chairperson		$25,000
Annual Cash Retainer for each of Compensation Committee and Governance Committee Chairperson		$20,000
Annual Equity Award for All Board Members		$140,000

Our Chairman and Chief Executive Officer does not receive any additional compensation for serving as a director. On April 30, 2021, each independent director received a grant of restricted stock in an amount equal to the annual equity award for the service period from May 1, 2021 until April 27, 2022, the date of our 2022 annual meeting, with such awards vesting on the date of the 2022 annual meeting. Our directors, as holders of restricted stock, will receive dividends, if any, on such restricted stock at the same time that regular dividend payments are made on the Company’s common stock. We do not expect any changes to the director compensation program for the 2022-2023 period. The next equity award grant to our independent directors is expected to be made on or around the date of our 2022 annual meeting of stockholders and will represent the directors’ annual grant for their services as a director until the 2023 annual meeting of stockholders.

All cash retainers will be paid to each independent director in quarterly installments. Any independent director may elect to receive all or a portion of his or her cash Board fees in fully vested shares of the Company’s common stock

 

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of an equivalent value, which have a grant date that is five business days before the regular quarterly payment date of such cash fees. Additionally, all of our directors will be reimbursed for reasonable travel and related expenses associated with attendance at our Board or committee meetings.

Program Rationale

The Company is the second-largest publicly-traded lodging REIT by enterprise value in the United States and was spun-off as a separate public company from Hilton to own complex lodging real estate held by Hilton in many instances for decades. In recommending director compensation, the Compensation Committee considered the complexity of issues overseen by the Board that are not commensurate with smaller, less complex lodging REITs. In particular, the Compensation Committee considered the following when determining the appropriate level of director compensation –

 

•

the complexity of matters that arise from the Company’s origin from a “propco/opco” Spin-off from Hilton, including commercial, governance and tax matters that require ongoing Board awareness and attention

 

•

the additional challenges faced from running a large, geographically dispersed portfolio

 

•

the sophistication of the Company’s portfolio, including joint venture and ground-leased assets, and

 

•

the potential for substantial transactions in the future (including additional complex portfolio dispositions, joint ventures, mergers or portfolio acquisitions) requiring substantial Board attention in order to effect meaningful portfolio transformation and growth for Park – and the related time commitment and expertise to advise on such transactions and related integration matters.

As a result, the Company’s director compensation was established in recognition of the amount of time and attention required of Board members in order for them to fulfill their responsibilities to the Company. In 2019, the Company acquired Chesapeake, which was an example of the type of significant transactional work expected by the Company’s directors to meaningfully effect Park’s transformation and growth. Despite this transaction and other complex issues recently faced by the Company that have required significant time and attention from the Board, the Compensation Committee has not adjusted director compensation since 2018.

The benefits that the Company gains from having such experienced and sophisticated directors have never been more valued than during the last two turbulent years. From the outset of the COVID-19 pandemic in March 2020, our Board has been focused on its oversight and risk management responsibilities. Throughout the crisis, our Board has been in regular contact with management, advising management as it continues to respond to this unprecedented period. Among other topics, the Board has reviewed and advised on our key strategic initiatives to increase and preserve our liquidity and financial flexibility, fortify our balance sheet, manage the suspension and reopening of various hotels in our portfolio and mitigate the unique risks presented by the COVID-19 pandemic and its effects on the lodging and hospitality industry.

 

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STOCK OWNERSHIP POLICY

 

To align the interests of directors with stockholders, the Board has adopted a requirement that each of our independent directors will be required to own stock in an amount equal to five times his or her annual cash retainer (exclusive of any additional cash retainer payable for service on a committee or as Lead Independent Director or a chairperson of the Board or committee). For purposes of this requirement, a director’s holdings include shares held directly or indirectly, individually or jointly, shares underlying unvested time-vesting restricted stock and shares held under a deferral or similar plan. Independent directors are expected to meet this ownership requirement within
five years of the later of (a) February 23, 2017 (i.e., the date on which the Company made its first broad-based equity incentive grants following the Spin-off) or (b) the date he or she first becomes subject to this stock ownership policy (the “Initial Compliance Deadline”). Following a director’s Initial Compliance Deadline, compliance with this policy is measured annually on the first business day of each calendar year, using the annual cash retainer then in effect and the average closing stock price of the Company’s common stock as reported on the NYSE during the immediately ended prior calendar year. As of January 4, 2022, each of our independent directors satisfied this requirement.

DIRECTOR TRAVEL

In order to encourage our independent directors to better understand our hotel assets and provide feedback on our portfolio, our independent directors are entitled to up to 30 complimentary room nights per calendar year (including associated room taxes and fees) at properties owned by the Company for their own use or use by family members accompanying them. Direct, incremental costs of the director’s room stay charge (i.e., the cost of cleaning the room daily) are considered compensatory to the director and the Company does not provide tax gross-ups to the directors with respect to these benefits.

DIRECTOR COMPENSATION FOR 2021

The table below sets forth information regarding non-employee director compensation for the fiscal year ended December 31, 2021. Mr. Baltimore is compensated as an executive officer and did not receive any compensation from the Company for serving as a director during fiscal year 2021.

 

Name		Fees Earned or     Paid in Cash(1) ($)				Stock Awards(2)   ($)				All Other     Compensation(3)     ($)				Total             ($)
Patricia M. Bedient			94,981				139,995				-				234,976
Gordon M. Bethune			130,000				139,995				210				270,205
Thomas D. Eckert			92,555				139,995				120				232,670
Geoffrey M. Garrett			87,500				139,995				140				227,635
Christie B. Kelly			112,452				139,995				200				252,647
Sen. Joseph I. Lieberman			95,000				139,995				900				235,895
Thomas A. Natelli			92,524				139,995				-				232,519
Timothy J. Naughton			107,447				139,995				-				247,442
Stephen I. Sadove			107,447				139,995				105				247,547

 

(1)

The following directors elected to receive all or a portion of their respective cash compensation in the form of fully vested shares of the Company’s common stock, which election resulted in the following number of fully vested shares being granted during fiscal year 2021, which number of shares were determined using the closing price of Park’s common stock on the NYSE on the applicable grant date: Ms. Bedient, 4,632; Ms. Kelly, 5,484; Mr. Natelli, 4,517; Mr. Naughton, 5,240; and Mr. Sadove, 5,240.

 

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(2)

Amounts shown in the Stock Awards column reflect the aggregate grant date fair value of each director’s restricted stock award granted in fiscal year 2021, computed in accordance with Financial Accounting Standards Board and Accounting Standards Codification (“FASB ASC”) Topic 718. The grant date fair value of such awards is determined using the fair value of the underlying common stock on the grant date. As of December 31, 2021, each of our non-employee directors held 6,275 restricted shares.

(3)	Amounts shown in the All Other Compensation column reflect the complimentary rooms, valued at the incremental cost to Park of the hotel room stay, for directors staying at properties owned by Park.

 

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PARK’S

EXECUTIVE OFFICERS

 

 

EXECUTIVE OFFICER BIOGRAPHIES

Set forth below is certain information regarding each of our current executive officers as of March 4, 2022, other than Mr. Baltimore, whose biographical information is presented under “Proposal 1: Election of Directors – Director Nominees.”

 

Sean M. Dell’Orto Executive Vice President, Chief Financial Officer and Treasurer   Age 47		Professional Experience   Mr. Dell’Orto has served as our Executive Vice President and Chief Financial Officer since December 2016 and also as our Treasurer from December 2016 until February 2020 and then again starting in January 2022. Prior to joining the Company, Mr. Dell’Orto served as Senior Vice President, Treasurer of Hilton Worldwide Holdings Inc. (NYSE: HLT), a global hospitality company, from September 2012 until December 2016. Prior to that, Mr. Dell’Orto served as Vice President, Corporate Finance of Hilton from February 2010 to September 2012, leading corporate forecasting and capital markets activities including debt fundraising and refinancing, loan workouts and modifications, strategic planning and debt compliance. Prior to his tenure at Hilton, Mr. Dell’Orto held similar management roles at Barceló Crestline Corporation and Highland Hospitality Corporation. Mr. Dell’Orto received his Bachelor of Science degree from University of Virginia and his Master of Business Administration degree from the Wharton School, University of Pennsylvania. Mr. Dell’Orto served on the pre Spin-off Board of the Company from December 2016 until January 3, 2017. Mr. Dell’Orto currently serves on the board of directors for the University of Virginia Foundation.

 

Carl A. Mayfield Executive Vice President, Design and Construction   Age 58		Professional Experience   Mr. Mayfield has served as our Executive Vice President, Design and Construction since September 2018. Prior to joining the Company, Mr. Mayfield served most recently as the Senior Vice President of Design & Construction at RLJ Lodging Trust (NYSE: RLJ), a lodging REIT, and RLJ Development, LLC from February 2004 to September 2018. Prior to his tenure at RLJ, Mr. Mayfield served as the Project Executive for Georgetown University’s $300 million, mixed-use campus expansion project and held senior positions representing Washington Sports and Entertainment and The World Bank. Mr. Mayfield received his Bachelor of Science degree in Civil Engineering from University of Delaware and his Master of Science degree in Real Estate Development from Johns Hopkins University. Mr. Mayfield currently serves on the board of directors of the American Red Cross of the National Capital Region and the Montgomery County Boys and Girls Club. He is also an executive mentor to graduate students at the Georgetown University McDonough School of Business.

 

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Thomas C. Morey Executive Vice President and Chief Investment Officer   Age 50		Professional Experience   Mr. Morey joined the Company in August 2016 and has served as our Executive Vice President and Chief Investment Officer since January 2020. From December 2016 until February 2018, he served as our Senior Vice President and General Counsel. From February 2018 until January 2020, he served as our Executive Vice President and General Counsel (and he continued to serve as our General Counsel on an interim basis from January 2020 until October 2020 when his successor was appointed). Prior to joining the Company, Mr. Morey served as Senior Vice President and General Counsel of Washington Real Estate Investment Trust, a multifamily, office and retail REIT, from October 2008 until July 2016. Prior to that, he served in a business role as Chief Operating Officer of Medical Funding Services, Inc., a provider of financial and administrative services to healthcare companies, from February 2006 to September 2008. Previously, Mr. Morey was a corporate partner with Hogan & Hartson LLP, a multi-national law firm (now known as Hogan Lovells US LLP), where he focused on capital markets transactions, mergers and acquisitions, strategic investments and general business matters for national and regional lodging, residential, office, retail and other REITs. From 1997 to 1998, Mr. Morey was a corporate attorney with Jones Day in Dallas, Texas. Mr. Morey is a former member of the board of directors of the Maryland Chamber of Commerce and also previously served on the Executive Committee of the Maryland Chamber of Commerce. Mr. Morey received his Bachelor of Arts degree from Princeton University and his Juris Doctor degree from Duke Law School. Mr. Morey served on the pre Spin-off Board of the Company from December 2016 until January 3, 2017.

 

Jill C. Olander Executive Vice President, Human Resources   Age 48		Professional Experience   Ms. Olander has served as our Executive Vice President, Human Resources since February 2018 and, prior to that, as our Senior Vice President, Human Resources from January 2017 until February 2018. Prior to joining the Company, Ms. Olander served as Vice President, Human Resources Consulting with Hilton (NYSE: HLT), a global hospitality company, from July 2013 until December 2016. Prior to that, Ms. Olander served as Senior Director of Human Resources Consulting with Hilton from April 2010 to July 2013. Prior to that, she served as Vice President of Human Resources for Allied Capital (acquired by Ares Capital Management in 2010), a private equity investment firm and mezzanine capital lender, from April 2006 to January 2010. Previously, Ms. Olander also held various Human Resources management roles at Chevy Chase Bank (now Capital One Bank), Deloitte & Touche and Capital One Financial. Ms. Olander received her Bachelor of Science degree from Vanderbilt University.

 

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Nancy M. Vu Senior Vice President, General Counsel and Secretary   Age 46		Professional Experience   Ms. Vu joined the Company in October 2016 and has served as our Senior Vice President, General Counsel and Secretary since October 2020. From October 2016 until January 2020, she served as our Assistant General Counsel – Real Estate, and from January 2020 until October 2020, she served as Senior Vice President and Deputy General Counsel. Prior to joining the Company, Ms. Vu served as Senior Director, Asset Management at Choice Hotels International (NYSE: CHH) from 2014 to 2016, leading and managing real estate, joint venture and capital transactions and investments for her assigned portfolio of assets. Ms. Vu previously served as Senior Counsel at RLJ Lodging Trust (NYSE: RLJ) from 2013 to 2014 and as Senior Counsel at Choice Hotels International from 2010 to 2013. Ms. Vu received her Bachelor of Science degree from Georgetown University and her Juris Doctor degree from the University of San Diego.

There are no family relationships among any of our directors or executive officers.

 

39

PROPOSAL 2

ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS

 

INTRODUCTION

We are asking stockholders to vote, on an advisory (non-binding) basis, to approve the compensation of our named executive officers, as required by Section 14A of the Exchange Act, and related SEC rules. This non-binding advisory vote is commonly referred to as a “say-on-pay” vote.

The Company has in place a comprehensive executive compensation program. Please refer to the Compensation Discussion and Analysis section of this Proxy Statement for a detailed discussion of the Company’s executive compensation program, practices and philosophy. The Compensation Committee intends to continually monitor executive compensation programs and adopt changes to reflect the dynamic marketplace in which the Company competes for talent, as well as general economic developments affecting executive compensation.

You have the opportunity to vote “for,” “against” or “abstain” from voting on the following resolution relating to executive compensation:

“RESOLVED, that the holders of common stock of Park Hotels & Resorts Inc. approve, on an advisory (non-binding) basis, the compensation of the Company’s named executive officers as disclosed in the Company’s Proxy Statement, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related material disclosed in the Proxy Statement.”

As provided by the Dodd-Frank Act, this vote is advisory, and therefore not binding on the Company, the Board or the Compensation Committee. However, the Board and Compensation Committee value the views of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

VOTE REQUIRED

Under our by-laws, approval of the say-on-pay proposal requires the affirmative vote of a majority of all the votes cast. This means that the number of votes cast “FOR” the proposal must exceed the number of votes cast “AGAINST” the proposal. Abstentions and broker non-votes, if any, are not counted as votes “FOR” or “AGAINST” and will have no effect on the result of this vote.

Our current policy is to provide our stockholders with an opportunity to approve the compensation of our named executive officers each year at the annual meeting of stockholders. Accordingly, we anticipate that the next such vote will occur at the 2023 annual meeting of stockholders.

BOARD RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.

 

40

COMPENSATION

DISCUSSION AND ANALYSIS

 

INTRODUCTION

This Compensation Discussion and Analysis (“CD&A”) provides an overview of the compensation for each of Park’s named executive officers (“NEOs”) under the executive compensation programs adopted by the Compensation & Human Capital Committee (in this section, the “Committee”). For fiscal year 2021, our NEOs were:

 

INDUSTRY AND COMPANY PERFORMANCE HIGHLIGHTS

2020 was one of the most challenging and disruptive years ever experienced in the lodging and hospitality industry. While we started 2021 optimistic as we watched the roll-out and distribution of COVID-19 vaccines across the country, the Company continued to face many uncertainties, including the impact of the ongoing pandemic, the emergence of new COVID-19 variants, the availability and acceptance of vaccines by the public and the willingness of the public to begin traveling again for both leisure and for business. Despite these obstacles, in fiscal year 2021, Park’s operations successfully began to return to some element of normal as we finished the year with 96% of our portfolio-wide rooms open, restarted working on several key redevelopment projects, recommenced our capital recycling efforts and continued to strengthen our balance sheet. All the while, the Company supported our employees by not conducting corporate-level layoffs or benefit cuts in response to the continuing impact of the pandemic on the Company’s business, while also enhancing the health and wellness offerings to our employees. Key actions taken in 2021 include:

 

•

successfully reopening six hotels during the year – resulting in all but two hotels in the Company’s portfolio being open by the year end – while continuously remaining focused on creating a safe environment for our guests

 

•

reimagining our operating model to create significant cost reduction while also working with our operating partners to prioritize meaningful changes to our processes, standards and amenities such as enhanced cleaning and limiting face-to-face contact

 

•

recommencing $110 million meeting space platform expansion project at the Bonnet Creek complex to add more than 100,000 square feet of meeting and event space

 

•

completing an offering of senior secured notes, raising $750 million and utilizing the net proceeds to repay outstanding bank debt by approximately $737 million

 

41

•

completing the sales of five consolidated hotels for total gross proceeds of approximately $477 million and utilizing the net proceeds to repay outstanding bank debt by $456 million, leaving just $78 million outstanding on Park’s sole remaining corporate term loan and no amounts outstanding on the revolving credit facility

 

•

strengthening our liquidity position by the end of fiscal year 2021, with over $1.6 billion in liquidity

 

•

increasing diversity and inclusion initiatives and activities, including the addition of a separate, mandatory training on diversity, equity, inclusion and unconscious bias for all employees; and

 

•

enhancing our health and wellness programs and offerings to focus on the physical, mental and spiritual well-being of our employees, including a flu shot clinic, paid membership for each employee to a 24/7 membership-based primary care medical practice, mindfulness training with dedicated coaches and leaders, emotional intelligence workshops and “Wellness Wednesdays,” an initiative targeted to improve physical, social, mental and spiritual wellbeing through bi-weekly Company-wide virtual events.

In fiscal year 2021, as described in the preceding section and in more detail below under “—Compensation Framework—Short-Term Incentive—Individual Performance Objectives”, our NEOs showed exceptional performance and leadership both in managing the Company in the face of the continuing COVID-19 pandemic and in strengthening the Company’s fundamentals and operating efficiencies, which we believe will enable the Company to build long-term value.

 

 

Throughout the pandemic, Park has remained focused on its ultimate mission of delivering superior, risk-adjusted returns for stockholders. Since its Spin-off, Park’s total stockholder return has outperformed approximately half of the companies in the FTSE Nareit Lodging Resorts Index with a market capitalization in excess of $1 billion (see Total Stockholder Return – Spin-off through 2021 chart below). However, as Park’s strategy regarding group and business transient segments has been acutely impacted by the COVID-19 pandemic, Park’s relative total stockholder return for fiscal year 2021 lagged behind many of its comparable companies (see Total Stockholder Return – 2021 chart below), particularly those that do not target the group and business segments. Despite these continuing challenges, we remain confident that by maintaining our focus on our key priorities, which includes aggressive asset management, prudent capital allocation and the de-leveraging of our balance sheet, we will be able to create sustained, long-term value and returns for our stockholders.

 

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*Source: FactSet data as of December 31, 2021.

For more information on our 2021 results and other related financial measures, see our 2021 Annual Report.

2021 SAY-ON-PAY

 

Every year, Park provides stockholders with the opportunity for an advisory (non-binding) vote on our executive compensation program (a “say-on-pay” vote). At our 2021 annual meeting of stockholders, approximately 18% of our stockholders supported our advisory vote on executive compensation. As a result, our 2021 say-on-pay advisory proposal did not pass. This vote was disappointing and in stark contrast to the historically strong say-on-pay support that we had received since the Spin-off as illustrated in the corresponding chart.
Following this vote, the Committee undertook an extensive stockholder outreach and engagement initiative in order to better understand our investors’ views regarding the Company’s executive compensation program. We reached out to 30 stockholders representing approximately 69% of our outstanding shares of common stock to invite them to participate in calls to discuss our executive compensation programs. Ultimately, 13 stockholders representing approximately 38% of our outstanding shares of common stock accepted our invitation to share feedback. Meetings took place in the fall/winter of 2021 and in early 2022 and were led by the Chair of the Committee.

 

43

		Key Themes from Stockholder Engagement   While our stockholders were generally in favor of the design of our executive compensation program, many expressed concern with the granting of special awards in 2020 outside of our annual compensation program, as well as a request (i) to return to the rigorous and measurable targets that had been in place prior to adjusting the program in response to the impact from COVID-19 and (ii) to enhance disclosure around the achievement of short-term incentive awards. Our
Committee is committed to implementing compensation programs that align with the interests of our stockholders. Our Committee confirmed that (i) it does not intend to make future special or one-time awards to our executive officers (except in connection with new hires and promotions) and (ii) Park’s executive compensation programs returned to a more normal framework – with rigorous and measurable targets and pay for performance alignment – in 2021. We have also enhanced disclosure around the achievement of the 2021 annual incentive awards.

 

What We Heard		What We Did
Special Awards/One-Time Grants – Strong opposition to special or one-time awards; should only be used in very limited instances		Committee confirmed that there is no intention to grant special or one-time awards to its executive officers (outside of new hires and promotions).
Executive Compensation Framework/Structure – Very supportive of the framework and design of our traditional (pre COVID-19 impacted) executive compensation program		Committee confirmed a return to Park’s normal LTIP compensation structure for FY 2021 and expected STIP for 2022, the same construct that received a score of a “1” by ISS for three consecutive years and stockholder support of 95%+ on say-on-pay vote.
Pay for Performance Alignment – Stressed that executive compensation should have strong linkage of pay for performance alignment		In February 2022, in response to stockholder feedback, the Committee amended the LTIP to increase the performance-based portion for executive’s target annual equity award: -    from 60% to 65% for CEO -    from 50% to 60% for Executive Committee members and/or Section 16 officers (other than CEO) – this being the first increase in the amount of LTIP tied to performance since the Spin-off   This change will go into effect for 2022 compensation awards.   Furthermore, as an example of our pay for performance alignment, due to our 2019-2021 relative TSR performance, 0% of the performance shares were earned.
Rigor of Targets – Request for STIP corporate objectives to be set at rigorous levels and for individual performance objectives to be more clearly defined   While highly supportive of relative total shareholder return (“TSR”) to other hotel REITs as the primary metric for LTIP awards, request to consider a limitation on PSU payout in the event that the Company’s TSR is negative or a possible additional metric for LTIP awards		There was a return to traditional rigorous objectives with measurable targets for 2021. Enhanced disclosure detailing the return to more normal corporate objectives is provided in this CD&A under the discussion “—Compensation Framework – Short-Term Incentive.”   The Committee implemented a modifier to the NEO’s 2022 PSU awards that adjusts PSU payout in the event that the Company’s TSR is negative for the applicable PSU award’s performance period.
ESG Metrics Tied to Compensation – Request for a portion of executive compensation be tied to ESG metrics – which metrics should be specific, material to the Company, objective and measurable		While ESG metrics have been included in certain executive officer’s individual objectives for the STIP (including Mr. Baltimore’s individual objectives for 2021), the Committee has introduced a formal ESG scorecard for implementation for 2022.

The Committee expects to continue to consider future annual say-on-pay votes and investor feedback when making decisions relating to our executive compensation program, policies and practices.

 

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EXECUTIVE COMPENSATION KEY ATTRIBUTES

Set forth below is a summary of some of the key attributes that define our executive compensation program.

 

What We Do						What We Don’t Do
✓   Maintain a short-term incentive program that is performance oriented and is based on rigorous and measurable Company performance metrics and individual performance objectives						×     No guaranteed minimum short-term incentive or long-term incentive payouts or annual salary increases
✓   Use total stockholder return as the sole performance metric for our performance stock units that are tied to multi-year performance						×     No tax gross-ups upon a change in control
✓   Maintain meaningful executive and independent director stock ownership policy • 6x for our Chief Executive Officer • 3x for other executive officers • 5x annual cash retainer for directors						×     No employment agreements with executives (other than our Chief Executive Officer, whose employment agreement was required in order to bring him to our Company from another chief executive officer position)
✓   Engage an independent compensation consultant						×     No pledging or hedging activities permitted by our executives and directors
✓   Conduct an annual peer group review to ensure total compensation is properly benchmarked						×    No plan design features that encourage excessive or imprudent risk taking
✓   Offer limited perquisites						×    No dividends on unearned performance stock units
✓   Maintain an incentive compensation clawback policy, allowing the Company to recover annual and/or long-term incentive compensation in certain situations

COMPENSATION PROCESS AND PHILOSOPHY

Our executive compensation programs are designed and administered under the direction and control of the Committee. The Committee is comprised solely of independent directors who review and approve our overall executive compensation programs and practices and set the compensation of our executive officers. In determining compensation for our executive officers, other than our Chief Executive Officer, the Committee considers, among other things, the recommendations of our Chief Executive Officer. The Committee is, however, solely responsible for making the final decisions on compensation for the Chief Executive Officer and other executive officers.

The Company’s executive compensation programs strive to achieve the following philosophy, principles and business objectives:

 

•

To align the interests of our executives with those of our stockholders to maximize stockholder value

 

•

To attract and retain top talent

 

•

To reinforce our business objectives and the Company’s values

 

•

To motivate management to balance short-term objectives with long-term value creation to the stockholders, and

 

•

To provide competitive compensation to management based on the marketplace in which the Company competes for talent.

 

45

ROLE OF COMPENSATION CONSULTANT

In 2017, following the Spin-off, the Committee engaged the services of Ferguson Partners Consulting L.P. (“FPC” – formerly known as FPL Associates L.P.) as its independent compensation consultant. FPC provides the Committee with advice and resources to help it assess the effectiveness of the Company’s executive compensation strategy and programs. A representative of FPC typically attends meetings of the Committee and communicates with the Committee Chair between meetings. FPC reports directly to the Committee, and the Committee has the sole power to terminate or replace FPC at any time. The Committee assessed the independence of FPC in 2021 in accordance with the applicable rules of the SEC and the NYSE. After considering the foregoing, the Committee determined that it was appropriate to engage FPC as its independent compensation consultant.

During 2021, FPC did not work for management and did not receive any compensation from the Company other than for its work in advising the Committee.

USE OF PEER GROUP DATA

The Committee uses compensation data compiled from Park’s peer groups of companies for benchmarking purposes. The Committee reviews such data annually. As well, the Committee updates, as necessary and upon recommendation of FPC, the companies in our peer groups. Traditionally, companies compare their compensation practices and performance against the performance of a single group of companies whose business model and industry are relatively similar to those of the company. However, in recognition of the size and complexity of the Company, the Committee, at FPC’s recommendation, determined that it would be appropriate to utilize two peer groups — one for size and one for the lodging industry — in designing and administering the Company’s 2021 compensation programs.

In January 2021, the Committee approved the 12-company size-based peer group and the 9-company lodging REIT-based peer group set forth below. The size-based peer group took into account comparability in size in terms of market/total capitalization and similar revenue streams (i.e., generally real estate businesses with short-term “lease/rental” durations). The lodging REIT-based peer group includes REITs with a strategic focus on hotel assets. The Committee expects to continue to annually review the composition of our peer groups and make changes when appropriate.

 

Size-Based Peer Group						Lodging REIT-Based Peer Group
Apartment Income REIT Corp.		Hyatt Hotels Corporation				Apple Hospitality REIT, Inc.		Ryman Hospitality Properties, Inc.
Apple Hospitality REIT, Inc.		JBG SMITH Properties				DiamondRock Hospitality Company		Summit Hotel Properties, Inc.
Camden Property Trust		RLJ Lodging Trust				Host Hotels & Resorts, Inc.		Sunstone Hotel Investors, Inc.
CubeSmart		Ryman Hospitality Properties, Inc.				Pebblebrook Hotel Trust		Xenia Hotels & Resorts, Inc.
Federal Realty Investment Trust		Sunstone Hotel Investors, Inc.				RLJ Lodging Trust
Host Hotels & Resorts, Inc.		Wyndham Worldwide Corporation

The size-based peer group has been utilized in designing pay programs calculated to attract and retain key employees in recognition of the greater responsibilities involved in managing a company of our size and complexity. The lodging REIT-based peer group has been utilized to assess Company executive compensation practices against other lodging REITs. We believe the peer group companies represent the size and industry with

 

46

which we currently compete for executive talent. The peer group companies also include many of our principal business peers.

FPC’s benchmarking compared the compensation of our executive officers based on base salary and total target compensation (including base salary, target short-term annual incentive compensation and an annualized long-term incentive compensation) with that of executive officers of similar titles and job roles across the peer companies. The Committee considered and expects to continue to consider the amount and mix of base and variable compensation by referencing, for each executive officer position, the prevalence of each element and the level of compensation that is provided in the market based on FPC’s comparison analysis.

In January 2022, the Committee again reviewed the composition of our size-based peer group and our lodging REIT-based peer group. Due to the overlap that has developed between the two peer groups over time and, upon the recommendation of FPC, for fiscal year 2022 executive compensation benchmarking purposes the Committee approved transitioning to a single peer group consisting of 14 companies primarily operating in the real estate and/or hotel/lodging industries that are between 0.5x and 2.0x the size of the Company. Of the companies previously included in the size-based peer group and our lodging REIT-based peer group, only DiamondRock Hospitality Company and Summit Hotel Properties, Inc. were removed from this new single peer group as neither of those companies fit within the size threshold.

ROLE OF EXECUTIVES

The Committee believes management input is important to the overall effectiveness of the Company’s executive compensation programs. The Committee believes the advice of an independent compensation consultant should be combined with management input and the business judgment of the Committee members to arrive at a proper alignment of our compensation philosophy, principles and business objectives.

The Chief Executive Officer, the General Counsel, the Chief Financial Officer and the Executive Vice President, Human Resources are the officers of the Company who interact most closely with the Committee. These individuals work with the Committee to provide their perspective on aligning executive compensation strategies with our business objectives. When determining compensation for our executive officers, other than the Chief Executive Officer, the Committee considered individual performance as summarized and assessed by the Chief Executive Officer. The performance of the Chief Executive Officer is assessed directly by the Committee in executive session without the Chief Executive Officer present.

COMPENSATION FRAMEWORK

The primary components of our 2021 executive compensation program are base salary, short-term incentive compensation (cash) and long-term incentive compensation (equity). These components are described in more detail below.

 

 

 

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Compensation and Performance Alignment

The Committee takes seriously its responsibility to maintain appropriate pay for performance alignment and has structured the executive compensation program so that the vast majority of compensation value delivered to our executives is in the form of compensation that is variable or “at-risk” based on Park’s performance or relative total stockholder return. The following charts illustrate the mix between the compensation elements (base salary, annual short-term incentive in the form of cash and annual long-term incentive in the form of RSAs and PSUs) for our Chief Executive Officer and the average of our other NEOs, in each case based on target levels of compensation. Consistent with our compensation philosophy, approximately 87.5% of our Chief Executive Officer’s compensation was performance-based or at risk and approximately 74.6% of the average compensation of our other NEOs was performance-based or at risk.

 

 

Base Salary

Structure

The base salary payable to each executive officer provides a fixed component of compensation that reflects the executive’s position and responsibilities. Base salary levels are intended to be comparable with the competitive market, as determined by the Committee in its judgment, but are not targeted to specific market levels. The Committee expects to review base salaries annually and may make adjustments to better match competitive market levels or to recognize an executive’s professional growth and development or increased responsibilities.

2021 Actual Base Salaries

For fiscal year 2021, the Committee reviewed and approved the base salaries shown below:

 

		Base Salary(1) ($)
Name		Fiscal Year 2021(2)				Fiscal Year 2020				% Change
Thomas J. Baltimore, Jr.			1,000,000				1,000,000(3)				0%
Sean M. Dell’Orto			500,000				500,000				0%
Carl A. Mayfield			475,000				475,000				0%
Thomas C. Morey			500,000				500,000				0%
Nancy M. Vu(4)			375,000				—				—

 

(1)

The amounts shown reflect annualized base salary amounts. Actual base salary amounts received by the NEOs are reported in the 2021 Summary Compensation Table.

(2)

In February 2022, the Committee approved increasing annual base salary starting in February 2022 to $550,000 for Mr. Dell’Orto, $522,500 for Mr. Mayfield, $550,000 for Mr. Morey and $435,000 for Ms. Vu. Mr. Baltimore did not receive any increase to his annual base salary.

(3)

Mr. Baltimore’s unreduced base salary for fiscal year 2020 was $1,000,000. However, on account of the COVID-19 pandemic, Mr. Baltimore waived his base salary beginning in April 2020 for the remainder of fiscal year 2020 (excluding the minimum amount of salary that was required to be paid under applicable laws and after applicable taxes and pre- and

 

48

post- tax amounts required to be contributed to the Company’s benefit plans). The $431,504 of Mr. Baltimore’s waived base salary was used for the benefit of property-level employees negatively impacted as a result of the COVID-19 pandemic. As a result of this waiver, his approved base salary for 2020 appears higher than his salary earned in 2020 as reported in the 2021 Summary Compensation Table.

(4)

Ms. Vu is a new NEO of the Company for fiscal year 2021 and therefore, in accordance with SEC rules, only fiscal year 2021 base salary information is presented.

Short-Term Incentive

Structure

The Company’s executive short-term incentive program (the “STIP”) is designed to reward Company executives designated at the level of senior vice president and above based on our Company’s overall performance and the individual’s contribution to that performance. Pursuant to the STIP, each fiscal year, the Committee will determine a target bonus (the “Target Bonus”) for each participant who is a member of the Executive Committee or is subject to Section 16 of the Exchange Act. Under the terms of the STIP (as amended) and unless otherwise determined by the Committee, the Target Bonus for each such participant will be in the amount or within the range set forth in the table below.

 

Participant Level		Target Bonus(1)
Chief Executive Officer		175% of base salary
Executive Vice President		100% of base salary
Senior Vice President		Up to 75% of base salary

 

(1)

The threshold and maximum amounts of the Chief Executive Officer’s bonus under the STIP will be 87.5% and 350%, respectively, of base salary (with the Committee having discretion to set a higher threshold amount and/or a higher maximum amount; however, such discretion to set a higher threshold and/or maximum amount was not used in 2021). The threshold and maximum amounts for each other NEO will be determined by the Committee each fiscal year.

 

Under the Company’s normal pre-pandemic compensation practices, each fiscal year, annual STIP bonuses will be earned based on the achievement of (i) individual performance objectives and (ii) company performance objectives as determined by the Committee at the beginning of such fiscal year, with such allocation between individual and corporate performance objectives determined by the participant’s level as				Target Bonus
		Participant Level		Individual Performance Objective					Company     Performance     Objective
		Chief Executive Officer		10%					90%
		Executive Vice President		20%					80%
		Senior Vice President		25%					75%

reflected in the corresponding table. As discussed below, for 2021, given the uncertain and rapidly evolving nature of the COVID-19 pandemic and its effects on the Company and its business, company performance objectives were set in two phases for the year.

Generally, to receive an award, participants must be employed by the Company through December 31 of the relevant fiscal year. Notwithstanding the foregoing, in the event of a participant’s termination of employment (other than with respect to Mr. Baltimore whose payments upon termination of employment are set forth pursuant to the terms of his Executive Employment Agreement with the Company, dated April 26, 2016 (the “CEO Employment Agreement”)) prior to December 31 of the relevant fiscal year (i) due to death or “disability” (as defined in the Company’s 2017 Omnibus Incentive Plan), the participant will receive a bonus for such fiscal year based on achievement of target performance but prorated for the actual days worked during such year, or (ii) due to “retirement” (as defined in the STIP), the participant will receive a bonus for such fiscal year based on actual achievement but prorated for the actual days worked during such year. In the event of a participant’s termination of employment by the Company for “cause” (as defined in the Company’s 2017 Omnibus Incentive Plan) following the end of the relevant fiscal year but prior to the payment of STIP bonuses for such fiscal year, the participant will forfeit his or her right to receive an annual STIP bonus for such fiscal year.

 

49

2021 Target STIP Awards

In February 2021, the Committee approved a Target Bonus for fiscal year 2021 for Mr. Baltimore of 175% of his base salary, with his bonus range being set at 87.5% to 350% of his base salary. The Committee also approved 2021 Target Bonuses of 100% of base salary (with bonus ranges of 50% to 200% of base salary) for each of Messrs. Dell’Orto, Mayfield and Morey and a 2021 Target Bonus of 75% of base salary (with a bonus range of 37.5% to 150% of base salary) for Ms. Vu. The chart below sets forth the Target Bonus opportunity as a percent of base salary and actual STIP bonus opportunity in dollars for each NEO at the threshold, target and high level for fiscal year 2021:

 

Name		Target STIP Opportunity (as a % of base salary)		STIP Bonus Opportunity ($)
				Threshold ($)				Target ($)				High ($)
Thomas J. Baltimore, Jr.		175%			875,000				1,750,000				3,500,000
Sean M. Dell’Orto		100%			250,000				500,000				1,000,000
Carl A. Mayfield		100%			237,500				475,000				950,000
Thomas C. Morey		100%			250,000				500,000				1,000,000
Nancy M. Vu		75%			140,625				281,250				562,500

2021 Company Performance Objectives

In light of the continued uncertainty caused by the COVID-19 pandemic, including its impact on the Company’s business and near-term priorities in 2021, the Committee, with the assistance of FPC, began discussing in late 2020 the structure of the Company’s 2021 corporate performance objectives under the STIP with the goal of returning to the Company’s normal pre-pandemic compensation structure as soon as the Committee was able to better assess the timing and trajectory of the recovery from the COVID-19 pandemic. In February 2021, given the continued uncertain and rapidly evolving nature of the COVID-19 pandemic and its effects on the Company and its business, the Committee approved splitting the 2021 corporate performance objectives into two phases, with the first phase corporate performance objectives (the “Phase I Corporate Objectives”) being approved by the Committee in February 2021 and consisting of three measurable near term strategic priorities focused on navigating the effects of the COVID-19 pandemic on the Company and the second phase corporate performance objectives (the “Phase II Corporate Objectives”) being approved by the Committee in July 2021 when the Company and the Committee hoped to have greater visibility into the timing and trajectory of the recovery. The Committee also concluded that, for the purpose of annual STIP bonuses, the final 2021 corporate performance objectives would be calculated as follows: (i) the Phase I Corporate Objectives would be collectively weighted 50% and (ii) the Phase II Corporate Objectives would be collectively weighted 50%.

PHASE I CORPORATE OBJECTIVES – 50% weight

In February 2021, the Committee adopted the following Phase I Corporate Objectives for the first half of 2021. In addition, in order to ensure that each such objective was measurable, the Committee further approved detailed metrics to determine achievement of each Phase I Corporate Objective. The following chart sets forth the description and weighting of each Phase I Corporate Objective, as well as the threshold, target and high levels for such objectives and the achievement results in the first half of 2021. The Committee intended the objectives to be rigorous yet reflective of the current uncertain environment and aligned with the shared goal during the first half of 2021 of reopening hotels and strengthening the business.

 

50

Phase I Corporate Objective (50%)

Allocation

Description

Measurement

Achievement

Threshold

Target

High

Liquidity & Cash Burn

35%

Maintain liquidity critical to withstand the continued disruption created by the COVID-19 pandemic and reduce the Company’s burn rate over time.

Hotel Re-Openings

15%

Safely re-open five to nine hotels during the first half of 2021

5

7

9

7

Portfolio Break-Even

10%

Achieve portfolio break-even within the first half of 2021

Jul ‘21

Apr ‘21

Jan ‘21

Mar ‘21

Return to Profitability Assessment

10%

Identify/implement initiatives to increase revenues and decrease costs

Threshold

Target

High

Target

Planning for Recovery

30%

Develop and implement initiatives to set the Company up for success as the industry begins to recover

Incremental Cost Savings

10%

Work collaboratively with brands and operators to identify and implement sustainable cost savings beyond the $70M identified in 2020

$5M

$15M

$25M

$14.7M

Re-start Renovation/ROI Projects

10%

Restart one to seven renovation or ROI projects that are at least $4M in size/value

1

4

7

4

Planning for Recovery Assessment

10%

Explore and evaluate future growth opportunities and efficiencies, including in regards to acquisitions, alternative capital sources and organizational structure

Threshold

Target

High

Target

Strengthen & De-Lever Balance Sheet

35%

Asset Sales

15%

Strategically sell assets in order to achieve $300-500M of proceeds for debt repayment

$50M

$200M

$350M

$173M

Repayment of Bank Debt ($M)

10%

Repay Revolver and Term Loan due 2024

$800M

$900M

$1,000M

$908M

Strengthen & De-Lever Balance Sheet Assessment

10%

Identify and execute on options to maintain cash on the balance sheet

Threshold

Target

High

Target

Based on the above achievements, the NEOs had an achievement level of 103% with respect to the Phase I Corporate Objectives.

PHASE II CORPORATE OBJECTIVES – 50% weight

In July 2021, in line with the Committee’s desire to return to a more normal compensation structure and based on visibility gained through the first half of 2021, the Committee adopted the following Phase II Corporate Objectives for the second half of 2021, which consisted of corporate financial metrics similar in focus to the metrics used in pre-pandemic STIP years. The Committee also assigned each performance objective a relevant weighting. The Committee selected the specific performance objectives because they complement various parts of the Company’s overall strategy and business goals as explained further below. The following chart sets forth the description and weighting of each Phase II Corporate Objective, as well as the threshold, target and high levels for such objectives and the achievement results.

 

Phase II Corporate Objective (50%)

Allocation

Description

Measurement

Achievement

Threshold

Target

High

Consolidated Portfolio RevPAR

15%

Focuses on revenue within our portfolio - one of the Company’s core pillars of aggressive asset management

$100

$112.50

$125.00

$107.85

Hotel Adjusted EBITDA Margin

15%

Focuses on “margin improvement” - as expense reduction is another of our core pillars of aggressive asset management

5.00%

12.50%

20.00%

20.10%

Adjusted EBITDA

35%

Focuses on the Company’s overall earnings profile, which is affected by both asset management and acquisition and disposition activity

$25M

$100M

$175M

$158M

Debt Reduction

35%

Focuses on our overall net leverage position to align with maintaining a strong, conservative balance sheet

$200M

$400M

$600M

$285.6M

Based on the above achievements, the NEOs had an achievement level of 129% with respect to the Phase II Corporate Objectives. After applying the applicable 50% weighting to each of the two phases for the corporate objectives, the NEOs had an achievement level of 116% with respect to the final aggregate 2021 corporate performance objective.

 

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Individual Performance Objectives

Each February, as part of the Company’s compensation cycle, the Committee sets individual performance objectives for the full year for Mr. Baltimore. Thereafter, Mr. Baltimore sets individual performance objectives for each other executive officer. At the end of each compensation cycle, Mr. Baltimore reviews and determines each executive officer’s individual performance rating and the Committee reviews and determines Mr. Baltimore’s individual performance rating. The following table highlights the assessed achievements, as well as the overall individual performance rating, for each NEO. When determining individual performance ratings, Mr. Baltimore or the Committee (as applicable) considers the impact each individual had on the Company’s overall goals and their respective departments, including the key performance highlights below.

 

Named Executive Officer		Individual Highlights
Thomas J. Baltimore, Jr.		•   Increased the Company’s stability by advancing key strategic objectives like effectively cutting operational costs and maintaining a strong balance sheet and sufficient liquidity   •   Navigated the ongoing challenges of the COVID-19 pandemic and applied a strategic lens to make decisions that moved the Company forward during the continuing crisis, including taking decisive action on when to open suspended hotels   •   Aggressively led the reimagination of our hotel operating model to create significant cost reductions, translating to nearly 300 basis points of estimated margin improvement   •   Worked with operators to ensure that the operating model efficiencies created during the pandemic were executed on and integrated for the long-term   •   Strengthened the Company’s commitment to elevating its people through succession planning and talent development, fostering an inclusive, equal and diverse culture and ensuring effective governance   •   Aligned and motivated the Company by modeling, communicating and reinforcing the Company’s mission, values and goals   •   Focused and enhanced ESG initiatives and disclosures
Sean M. Dell’Orto		•   Led the negotiations and successful execution of senior secured notes offering   •   Restructured the balance sheet by utilizing net proceeds from hotel dispositions and senior secured notes offering to repay outstanding bank debt   •   Led the development of enhanced financial reporting metrics and benchmarks critical to illustrate the state of the portfolio following the effects of the COVID-19 pandemic   •   Oversaw the establishment of an insurance captive entity, providing the Company with optionality when it comes to procuring property insurance   •   Oversaw enhanced disclosure related to ESG, including publication of the 2021 Annual Corporate Responsibility Report, second submission to GRESB and disclosure under TCFD
Carl A. Mayfield		•   Led the recommencement of the $110 million Bonnet Creek meeting space platform expansion project and hotel complex renovation   •   Oversaw asset preservation and maintenance work that capitalized on the opportunity to complete such improvements while hotel operations were suspended   •   Oversaw the creation of the Green Park Sustainability Playbook, allowing Park’s risk team to quickly mobilize after a storm event and minimize damage to internal building systems and finishes, as well as create safe conditions for first responders   •   Developed and implemented enhancements to the Company’s incident notification system and first responder programs with Park’s insurance partners

 

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Named Executive Officer		Individual Highlights
Thomas C. Morey		•   Successfully led the negotiations and completion of the disposition of five hotels in 2021, generating total gross proceeds of approximately $477 million   •   Oversaw the development of a structured diligence process for reviewing potential acquisition targets   •   Oversaw the development of a comprehensive portfolio management platform, allowing the Company to develop a common vision, strategic plan and capital plan for each asset in the portfolio   •   Oversaw the creation of a comprehensive framework for the Company’s various ongoing development projects
Nancy M. Vu		•   Oversaw and advised on all legal aspects of the Company’s transactions, including the senior secured note offering and the disposition of five hotels, and regulatory matters   •   Assisted CEO with Board communication   •   Oversaw the legal analysis and negotiation of key operational matters with operators   •   Coordinated and participated in significantly expanded stockholder outreach efforts led by the Chair of the Compensation Committee   •   Oversaw the restructuring of the Company upper-tier entities into a “UPREIT” structure, resulting in a simplified structure and providing more optionality for future transactions

2021 Actual STIP Awards

Based on the above individual performance scores and the achievement of the corporate performance objectives set forth above, the Committee approved the following 2021 actual STIP awards:

 

Name		Corporate Objective Payout ($)				Individual Performance Payout ($)				Total 2021 STIP Award ($)				Percentage of Target Paid Out
Thomas J. Baltimore, Jr.			1,825,950				285,000				2,110,950				121%
Sean M. Dell’Orto			463,733				200,000				663,733				133%
Carl A. Mayfield			440,547				142,500				583,047				123%
Thomas C. Morey			463,733				200,000				663,733				133%
Nancy M. Vu			244,547				105,469				350,016				124%

 

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