Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 3, 2010
DiamondRock Hospitality Company
(Exact name of registrant as specified in its charter)
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Maryland |
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001-32514 |
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20-1180098 |
(State or other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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6903 Rockledge Drive, Suite 800 Bethesda, MD
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20817 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrants telephone number, including area code: (240) 744-1150
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(Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS;
COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
The Compensation Committee of the Board of Directors (the Compensation Committee) of DiamondRock Hospitality
Company (the Company) redesigned the Companys equity award program in 2010, based on a recommendation from Frederic
W. Cook & Co., Incorporated, its independent compensation consultant, in order to grant equity awards to each named
executive officer consisting of 75% time-based restricted stock and 25% market stock units, or MSUs.
The restricted stock awards vest ratably over three years.
MSUs are restricted stock units that vest three years from the date of grant, subject to the achievement of
certain levels of total stockholder return over the vesting period (the Performance Period). The 2010 MSUs will vest
on February 27, 2013. The Company will not pay dividends on the shares of common stock underlying the MSUs;
instead, the dividends are effectively re-invested as each of the executive officers is credited with an additional
number of MSUs that have a fair market value (based on the closing stock price on the day the dividend is paid) equal
to the amount of the dividend that would have been awarded for those shares.
Each executive officer was granted a target number of MSUs (the Target Award). The actual number of MSUs that
will be earned, if any, and converted to common stock at the end of the Performance Period is equal to the Target Award
plus an additional number of shares of common stock to reflect dividends that would have been paid during the
Performance Period on those shares multiplied by the percentage of total stockholder return over the Performance Period
based on (x) the 30-trading day average closing price of our common stock calculated on the vesting date plus dividends
paid and (y) the 30-trading day average closing price of our common stock on the date of grant. There will be no
payout of shares of our common stock if the total stockholder return percentage on the vesting date is less than negative 50%.
The maximum payout to an executive officer under an MSU award is equal to 150% of the Target Award.
Generally, the MSUs will be subject to accelerated or continued vesting to the extent that time-based equity
awards would become fully vested or continue to vest pursuant to the severance agreement in effect between the Company
and each executive officer. Upon a change-in-control, the MSUs will vest and the Performance Period shall end on the day immediately
preceding the change-in-control and the attainment of the performance goals will be calculated by reference to the
30-trading day average closing price of our common stock on the date immediately preceding the change-in-control.
On March 3, 2010, the executive officers named below received restricted stock and MSUs as follows:
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Restricted Stock |
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MSU (3) |
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Grant Date |
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Grant Date |
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Shares of |
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Fair Value |
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Fair Value of |
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Maximum |
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Restricted |
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of Award |
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Minimum |
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Target |
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Target Award |
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Award |
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Stock (#)(1) |
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($)(2) |
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Award (#)(4) |
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Award (#) |
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($)(5) |
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(#)(6) |
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Mark W. Brugger |
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133,769 |
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1,124,997 |
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0 |
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37,994 |
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375,001 |
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56,991 |
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John L. Williams |
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75,803 |
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637,503 |
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0 |
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21,530 |
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212,501 |
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32,295 |
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Sean M. Mahoney |
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44,590 |
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375,002 |
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0 |
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12,665 |
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125,004 |
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18,998 |
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William J. Tennis |
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44,590 |
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375,002 |
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0 |
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12,665 |
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125,004 |
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18,998 |
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(1) One third of the restricted stock will vest annually beginning on February 27, 2011.
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(2) Represents the grant date fair value of the restricted stock based on the closing price of the common stock of the
Company on March 3, 2010.
(3) Each MSU represents a contingent right to receive one share of common stock of the Company, subject to the
achievement of stockholder returns as described above. The number of MSUs set forth in this column represents the
Target Award. However, the actual number of MSUs to be received, if any, is subject to the achievement of those
returns and will vest on February 27, 2013.
(4) Represents the
minimum payout to the executive officer under an award, which is
earned if the total stockholder return is less than negative 50%. The
minimum payout results in an award of no shares to the executive
officer.
(5) Represents the grant date fair
value of the Target Award based on a valuation study conducted by a
third party compensation consultant.
(6) Represents the
maximum payout to the executive officer under an award, which is
earned if one total stockholder return exceeds 50%. The maximum
payout is equal to 150% of the Target Award.
The foregoing description of the MSUs are qualified in its entirety by the full terms and conditions of the form of
Market Stock Unit Agreement which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein
by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
See Index to Exhibits attached hereto.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
DIAMONDROCK HOSPITALITY COMPANY
Date: March 9, 2010
By: /s/ William J.Tennis
William J. Tennis
Executive Vice President and
General Counsel
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EXHIBIT INDEX
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Exhibit No. |
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Description |
10.1
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Form of Market Stock Unit Agreement |
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Exhibit 10.1
Exhibit 10.1
DiamondRock Hospitality Company
Market Stock Unit Agreement
Name of Grantee:
Target No. of Market Stock Units Granted:
_____
(the Target Award)
Grant Date of Award: March 3, 2010
Performance Measure: Total Shareholder Return (as described in Exhibit A).
Pursuant to the DiamondRock Hospitality Company Amended and Restated 2004 Stock Option and
Incentive Plan as amended through the date hereof (the Plan), DiamondRock Hospitality
Company (the Company) hereby grants a deferred stock award pursuant to Section 8 of the
Plan consisting of the number of Market Stock Units listed above (an Award) to the
Grantee named above. Each Market Stock Unit shall relate to one share of Common Stock, par value
$0.01 per share (the Stock) of the Company specified above, subject to the restrictions
and conditions set forth herein and in the Plan, and subject to the attainment of performance goals
set forth in Exhibit A (the Performance Goals).
1. Acceptance of Award; Rights as Shareholder.
(a) The Grantee hereby acknowledges and understands that the Award represents a commitment of
the Company to issue shares of Stock in the future, subject to the attainment of the Performance
Goals and the receipt by the Company of a fully executed copy of this Agreement.
(b) The Award shall be settled by transferring to the Grantee a number of shares of Stock
based on the Target Award (as adjusted pursuant to Section 2) if, and only to the extent that, the
Performance Goals are achieved during the period commencing on the Grant Date (the
Commencement Date) through, and including, February 27, 2013 (the Performance
Cycle). The Administrator shall certify at its first meeting after the completion of the
Performance Cycle, whether and to what extent the Performance Goals have been met. The actual
number of shares of Stock to be issued to the Grantee will vary depending upon the attainment of
the Performance Goals, and could be more or less than the Target Award specified above.
(c) Upon such certification,
the relevant number of shares of Stock, in the form of fully vested
shares of Stock, shall be issued and delivered to, or otherwise registered in book entry in the
name of, the Grantee, and the Grantees name shall be entered as the stockholder of record on the
books of the Company and shall have all the rights of a shareholder with respect to such shares of
Stock. Any vested shares of Stock shall be so issued and delivered to the Grantee no later than
two and one-half months after the end of the Performance Cycle.
2. Dividends.
Dividends on the shares of Stock underlying the Market Stock Units shall not be paid to the
Grantee unless and until the Grantee vests in, and is issued, the relevant shares of Stock
underlying the Market Stock Units. The Grantee shall not be entitled to receive dividends with
respect to Market Stock Units that do not vest. Upon the vesting of the Market Stock Units, the
Grantee shall receive an additional number of shares of Stock equal to the dividends paid with
respect to such vested Market Stock Units based on the following assumptions: (i) that the Grantee
had received the number of shares of Stock on the Grant Date corresponding to the number of Market
Stock Units in which the Grantee actually vests, and (ii) all of the dividends that would have been
paid on such shares of Stock had they been issued on the Grant Date during the period
from the Grant Date to the date of vesting were reinvested in Stock on the dividend payment date,
utilizing the closing price on the New York Stock Exchange on each date that dividends were paid.
3. Vesting of Performance Shares.
(a) A Grantee shall only vest in the Award to the extent the Performance Goals are attained,
as more fully described in Exhibit A.
(b) Subject to Sections 3(c) and 3(d), if the Grantee ceases to have any employment or other
service relationship with the Company either as an employee or director for any reason prior to the
date of Administrator certification, the unvested Award shall be cancelled and no Stock shall be
issued to the Grantee. The Grantees eligibility to receive any shares of Stock in connection with
the Award is conditioned on (i) the Grantees continuous employment or other service relationship
with the Company through and on the date of Administrator certification and (ii) the attainment of
Performance Goals.
(c) Notwithstanding anything contained herein to the contrary, the Award shall be subject to accelerated or continued
vesting and shall not be cancelled as described above to the same extent that time-based equity
awards would become fully vested or continue to vest pursuant to the Severance Agreement in effect
between the Company and the Grantee (the Severance Agreement). For the avoidance of
doubt, any such accelerated or continued vesting shall mean that the Grantee does not need to be
continuously employed through the end of the Performance Cycle, but the Award will still be paid
based on actual performance to the extent achieved, at the end of the Performance Cycle.
(d) Notwithstanding anything contained herein to the contrary or in Section 3(c) of the Plan,
in the event of a Change in Control, the Performance Cycle shall be deemed to have ended on the day
immediately preceding the Change in Control and the attainment of the Performance Goals shall be
calculated by reference to the Stock Price on the date immediately preceding the Change in Control.
4. Delivery of Stock.
The Company shall not be obligated to deliver any shares of Stock in accordance with the terms
of the Award until (i) all federal and state laws and regulations as the Company may deem
applicable have been complied with; (ii) the shares have been listed or authorized for listing upon official notice to the national stock exchange on which the Common Stock is traded or
have otherwise been accorded trading privileges; and (iii) all other legal matters in connection
with the issuance and delivery of the shares have been approved by the Companys legal department.
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5. Incorporation of Plan.
Notwithstanding anything herein to the contrary, this Agreement shall be subject to, and
governed by, all the terms and conditions of the Plan, including the powers of the Administrator
set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning
specified in the Plan, unless a different meaning is specified herein.
6. Transferability.
This Agreement is personal to the Grantee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of descent and
distribution. The Award, and any shares of Stock issuable with respect to the Award may not be
sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of
or encumbered, whether voluntarily or by operation of law until (i) the Award has vested as
provided in Section 3 of this Agreement and (ii) shares of Stock have been issued to the Grantee.
Any attempted disposition of Stock not in accordance with the terms and conditions of this Section
6 shall be null and void, and the Company shall not reflect on its records any change in record
ownership of any shares of Stock as a result of any such disposition, shall otherwise refuse to
recognize any such disposition and shall not in any way give effect to any such disposition of any
shares of Stock.
7. Tax Withholding.
Upon the settlement of the Award, the Company shall withhold from the shares of Stock to be
issued to the Grantee, a number of shares of Stock with an aggregate Fair Market Value that would
satisfy the minimum Federal, state and local tax required to be withheld by the Company as a result
of such taxable event.
8. Miscellaneous.
(a) Notice hereunder shall be given to the Company at its principal place of business, and
shall be given to the Grantee at Grantees place of employment, or in either case at such other
address as one party may subsequently furnish to the other party in writing.
(b) This Agreement does not confer upon the Grantee any rights with respect to continuation of
employment by the Company or any Subsidiary.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
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DiamondRock Hospitality Company |
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By: |
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Name: |
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Title: |
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The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by
the undersigned.
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Dated: |
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Grantees Signature |
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Exhibit A
Performance Goals and Vesting Schedule
The actual number of shares of Stock, if any, to be issued to the Grantee is equal to the Target
Award plus an additional number of shares of Stock to reflect dividends paid during the Performance
Cycle, determined in accordance with Section 2 of the Award (such amount, the Adjusted Target
Amount) multiplied by the TSR Multiplier, subject to a maximum payout of 150% of the Target Award.
The TSR Multiplier means the total percentage return per share achieved by the Stock over the
Performance Cycle, assuming contemporaneous reinvestment in the Stock of all dividends and other
distributions at the closing price of one share of Stock on the date such dividend or other
distribution was paid, based on the Initial Stock Price and the Final Stock Price.
"Final Stock Price means the Stock Price on the last day of the Performance Cycle.
"Initial Stock Price means the Stock Price on the Commencement Date.
"Stock Price means, as of a particular date, the average closing price of one share of Stock for
the 30 consecutive trading days ending on, and including, such date (or, if such date is not a
trading day, the most recent trading day immediately preceding such date).
If the TSR Multiplier is less than 50%, no shares of Stock shall be issued as the minimum
performance goal shall not have been attained.
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