The 2006 Hotel Industry Board Survey
In our annual survey of board performance we analyzed the public documents of forty-four public lodging companies
Our eighth annual study of board practices and performance in the lodging industry determined that Four Seasons was the best in market. It was the second time Four Seasons topped the list of publicly traded lodging companies. The last two years have seen significant transition in the areas of corporate governance and executive pay. Shareholders are expecting accountability and transparency like never before. For the most part, lodging companies have been listening to shareholding and industry experts and have made their boardrooms less clubby and more about work product. Interestingly, there were twelve new companies in our study with many new REITs added, a few real estate companies and two cruise lines. Forty-four companies were in our survey and they were ranked in four key categories:
- Size, makeup and independence of the board
- Committee structure and effectiveness
- Presence of interlocks, insider participation and related transactions
- Commitment to pay-for-performance in executive and director pay.
We modified some of the criteria in response to evolving market conditions. For example, we deducted points for the presence of an executive committee and the linkage of chairmanship with the CEO. Nearly 30% of the survey group still had an executive committee and 42% allowed the CEO to be chairman. We gave extra points for having a lead director (a designated director that can call special meetings of the outside board members). Furthermore, we gave an additional point to boards that required directors to purchase stock in the company. Four companies in the survey group appointed lead directors and eight required directors to buy stock in the company. The following are some further trends we observed:
- 43% had an unbalanced board (an even number of members)
- 63% had too many insiders on the board
- 50% had three-year terms, instead of one-year terms
- 23% had insufficient committee structures
- 75% had allowed insider participation or had interlocks.
Board Size, Makeup and Independence
Committee Structure
Interlocks and Insider Participation
Pay-For-Performance
Rank | Company |
Size & Makeup |
Committee Structure |
Insider Participation & Interlocks |
Pay-For-Performance |
Total* |
1 | Four Seasons | 6 | 10 | 10 | 9 | 35 |
2 | Priceline.com | 10 | 10 | 5 | 9 | 34 |
3 | Sunstone Hotel Investors | 10 | 7 | 10 | 7 | 34 |
4 | LaSalle | 7 | 7 | 10 | 8 | 32 |
5 | Ashford Hospitality | 6 | 8 | 10 | 7 | 31 |
6 | Host Hotels & Resorts | 5 | 6 | 10 | 9 | 30 |
7 | Strategic Hotels & Resorts | 7 | 9 | 5 | 8 | 29 |
8 | Choice Hotels | 3 | 6 | 10 | 9 | 28 |
9 | St Joes Company | 5 | 10 | 5 | 8 | 28 |
10 | Highland Hospitality | 3 | 5 | 10 | 9 | 27 |
11 | Bluegreen Corporation | 6 | 5 | 10 | 6 | 27 |
12 | Interstate | 8 | 6 | 5 | 8 | 27 |
13 | Great Wolf Resorts | 6 | 7 | 5 | 9 | 27 |
14 | Eagle Hospitality | 6 | 8 | 5 | 7 | 26 |
15 | Hilton | 3 | 9 | 5 | 9 | 26 |
16 | Legacy REIT | 6 | 9 | 5 | 6 | 26 |
17 | Lodgian | 7 | 3 | 10 | 6 | 26 |
18 | Marriott International | 1 | 6 | 10 | 9 | 26 |
19 | Loews Corporation | 4 | 5 | 10 | 6 | 25 |
20 | Walt Disney Company | 5 | 8 | 5 | 7 | 25 |
21 | Red Lion | 5 | 9 | 5 | 6 | 25 |
22 | Marcus | 6 | 5 | 5 | 8 | 24 |
23 | DiamondRock Hospitality | 2 | 7 | 5 | 10 | 24 |
24 | Starwood Hotels | 4 | 7 | 5 | 8 | 24 |
25 | Crescent Real Estate | 2 | 10 | 5 | 7 | 24 |
26 | Gaylord Entertainment | 3 | 7 | 5 | 8 | 23 |
27 | Hersha | 5 | 6 | 5 | 7 | 23 |
28 | Royal Caribbean | 7 | 8 | 0 | 8 | 23 |
29 | Supertel | 2 | 6 | 10 | 5 | 23 |
30 | CHIP REIT | 4 | 8 | 5 | 6 | 23 |
31 | Maui Land | 7 | 7 | 0 | 8 | 22 |
32 | Winston Hotels | 6 | 3 | 5 | 8 | 22 |
33 | Felcor | 5 | 5 | 5 | 6 | 21 |
34 | Vail | 5 | 4 | 5 | 7 | 21 |
35 | Equity Inns | 4 | 4 | 5 | 7 | 20 |
36 | Forest City | 4 | 9 | 0 | 7 | 20 |
37 | American Ski | 2 | 6 | 5 | 7 | 20 |
38 | Carnival Corp | 2 | 6 | 5 | 6 | 19 |
39 | Hospitality Properties Trust | 6 | 3 | 5 | 4 | 18 |
40 | Innkeepers Trust | 4 | 4 | 0 | 8 | 16 |
41 | ILX Resorts | 5 | 3 | 0 | 7 | 15 |
42 | Sonesta Intl Hotels | 6 | 2 | 0 | 6 | 14 |
43 | InnSuites | 4 | 4 | 0 | 5 | 13 |
44 | Humphrey Hospitality Trust | 3 | 4 | 0 | 5 | 12 |
Keith Kefgen
+1 516 248-8828 ext. 220
HVS