This excerpt taken from the AHT DEF 14A filed Mar 31, 2006.
2005 Compensation for Executive Officers
For 2005, the primary components of Ashfords executives compensation consist of: (i) base salaries; (ii) annual bonuses; and (iii) other executive programs and benefits. Each element is described in more detail below.
The Chief Executive Officer, utilizing the above factors, reviews base salaries annually and makes recommendations to the Committee. Any interim modifications to salaries are also based on the above factors and recommendations are made to the Committee. In March 2006, the Chief Executive Officer made recommendations to the Committee with respect to increases in the base salaries for each of our executive officers other than the Chief Executive Officer, and the Committee and our Board of Directors approved increased base salaries of $500,000, $325,000, $325,000 and $220,000 for our Chief Operating Officer, our Chief Financial Officer, our Chief Legal Officer and our Chief Accounting Officer, respectively. These new base salaries were effective as of January 1, 2006.
As revised in March 2006, the employment agreements for each of the executive officers provide for a targeted annual bonus during the terms of the respective agreements based on the level of accomplishment of management and performance objectives as established by the board or the Committee. Prior to the revisions made in March 2006, each of the employment agreements provided for a minimum and a maximum annual bonus amount. Each of the executive officers received the maximum bonus amounts set forth in their respective employment agreements for the 2005 fiscal year. In making its determination as to the level of bonuses paid to the executive officers, the
compensation committee utilized the services of a consulting firm, which conducted a survey of executive officer compensation within competitive industries and made a recommendation as to bonuses for our executive officers.
The Committee believes that Ashfords key employees should have an ongoing stake in the long-term success of the business. The Committee also believes that key employees should have a considerable portion of their total compensation paid in the form of stock. This element of the total compensation program is intended to align the executives interest to that of Ashford stockholders through the granting of stock options, restricted stock and other incentive-based awards. The same factors that are used in determining other elements of compensation are used in determining long-term incentive grants. In March 2005, the Committee granted 188,900 shares of common stock to executive officers, other than the Chief Executive Officer, and 18,000 shares of common stock to other key employees based, in part, on the performance of these executive officers and employees during 2005. Additionally, in March 2006, the Committee granted 320,000 shares of common stock to executive officers, other than the Chief Executive Officer, and 30,000 shares of common stock to other key employees in March 2006 based, in part, on the performance of these executives officers and employees during 2005. All such shares will vest in equal annual installments on each of the first three anniversaries of the date of issuance.
Other Executive Programs and Benefits
During 2005, Ashford maintained an Employee Savings Incentive Plan (ESIP). Under the ESIP, Ashford matched 25% of a participants contribution to the ESIP, up to 10% of such participants base salary. In January 2006, Ashford implemented a 401(k) plan under which Ashford matches 50% of an eligible participants contribution to the plan, up to 6% of such participants base salary, subject to limitations imposed by the Internal Revenue Service.